Lecture 15: How We Decide Flashcards

Question

explain the Are there more English words with “r” as the first letter, or with “r” as the third letter? availability bias example

Answer 1

Question 3: Which has more? Are there more English words with “r” as the first letter, or with “r” as the third letter? r _ _ _ … _ _ r _ … Answer: (b) there are ~twice as many words with “r” as their 3rd letter vs those with “r” as their 1st letter; but you may have been tempted to pick (a) since it is easier for you to think of words that that with r vs words that have r as their 3rd letter → falling prey to the availability heuristic

Answer 2

Question 4: Example of a similar question but very straightforward…Which is more likely? A dog on a lease or a pig on a lease? Answer: dog on a lease (obviously): but the way you probably thought about it was NOT doing the actual calculations and instead what comes to mind more easily?

Answer 3

Ie. Which picture seems the most dangerous? → Are you more scared of a plane, car, or bathtub? Most people will rank the plane being most scary, car, and then bathtub HOWEVER, in reality and statistically…planes are much much safer than cars and even safer than bathtubs but people think the opposite When you think of a bathtub, you think of peaceful experience and NOT bathtub accidents/deaths HOWEVER, when you think of planes, you think of plane crashes/accidents since that is what you usually see in the news about planes → may also be why people play lotteries: we see and hear hundreds of stories of people winning the lotteries so when we think of lotteries, we think of WINNING the lottery and not losing

Answer 4

1. Pres Daniel vs Lebron James 2. rain

Answer 5

the false thinking that the conjunction of 2 events is more probable than 1 of the conjuncts - the probability of A AND B must be less than or equal to the probability of A P(A and B) < or = P(A) ^^ think in terms of probability

Answer 6

Pres. Daniels plays LeBron James in a one-on-one game of basketball. What are the odds that… The first scoring play of the game is a layup by President Daniels The first scoring play of the game is a layup by President Daniels, but then King James takes over and crushes President Daniels The intuitive answer is that the second scenario is more likely but it is NOT true since the 1st scenario is basically a SUBSET of the 2nd scenario (scenario 2 includes scenario 1) so it CANNOT be more likely than scenario 1 since it requires scenario 1 to happen in order for scenario 2 to happen

Answer 7

Ie. What's the probability that it will rain tomorrow? Vs What’s the probability that it will rain tomorrow AND I’ll wear my rain jacket?

Answer 8

representativeness could be the reason Ie. Scenario A does not feel very representative of how the game will go between President Daniels and Lebron James

Answer 9

1. JHU Student center’s construction 2. college students honor thesis

Answer 10

Supposed to open in Fall 2024, but it is still not open → a lot of construction around campus Quite common for construction projects to be delayed → so common that there is a name for this type of delay: aka the planning fallacy

Answer 11

The main study of the planning fallacy is focused on college students: researchers recruited college seniors who were working on their college thesis and asked them how long it would take them to complete/turn in their college thesis? What is your prediction of your “best-case” scenario (earliest time you will turn it in) What is your prediction of your “worst-case” scenario (latest time you will turn it in) Results: in fact it took longer than the “worst-case” scenario → everything takes longer than you think

Answer 12

the planning fallacy: our failure to anticipate how the future is going to go especially when it involves our own actions

Answer 13

availability bias it is easy to imagine what it will be like to do the work (yourself working and completing the honors thesis) but it is hard to imagine all of the distractions (there are a lot of things that can distract you from it) like concerts, personal life stuff…

Answer 14

days until submission best-case: <15 prediction: 30 worst-case: >45 actual: <60

Answer 15

Sample size neglect Base rate neglect Availability bias Conjunction fallacy Planning fallacy

Answer 16

1. endowment effect 2. temporal discounting

Answer 17

a cognitive bias that causes people to value items they own more than they would if they didn't own them

Answer 18

Question 1: You want to buy a car stereo. You can buy one near your house for $248, or you can go to DC to get the same exact stereo for just $48. Would you spend 2 hours to save $200? Good idea to go to DC (yes) Question 2: You want to buy a car. You can buy one near your house for $30,348, or you can go to DC to get the same exact car for just $30,148. Would you spend two hours to save $200? Feels like the answer is NO, BUT this is actually the same question as question 1 (aka still saving 200$ to go to DC) Question 3: This mug is for sale at the JHU Barnes & Noble. What is it worth? What would you pay for it? What would you sell it for? Willingness to pay: a measure of how much you value something → ask someone “how much would you pay for it?” BUT there is a different way to ask this question → “What would you SELL it for?” People give a higher number for selling (vs buying) when they have to give up a thing that is THEIRS vs when they have to pay for something that is NOT THEIRS → aka the endowment effect Weird that people give different answers for these two questions

Answer 19

Richard Thaler: won a nobel prize and known for the finding of literally that you want to sell your mug for more than you want to pay for it This finding is part of what founded the field of behavioral economics

Answer 20

asks the question how do people behave in economic situations? You first model how people SHOULD behave and then learn that people don’t actually model the way that behavioral economics say they should

Answer 21

X-axis: the objective gains and losses that you could incur Y-axis: How you experience these gains and losses (how do you feel about the gains and losses) If we were perfectly rational, the graph should show a linear relationship/line and should be symmetry about the y-axis IN REALITY, people feel the way on the right and notice the 2 features… 1. The slope of the line is steeper on the loss side than the gain side → losses are felt more than gains (it feels worse to lose the same amount of money than it feels good to gain the same amount of money) 2. Both sides of the line asymptote → the more you gain/loss, the less you feel about them

Answer 22

LITERALLY JUST THINK SLOWER When you use your fast gut reactions, you often make these mistakes → LITERALLY JUST THINK SLOWER and don’t always automatically rely on your heuristics and instead take more time to think it out The way we know this is true is to take the Cognitive Reflection Test (CRT) ← literally a test of slowness

Answer 23

the finding that we seem not to value something the same way if it is a long way off into the future even if it is worth the same

Answer 24

1. Try not to make these mistakes to begin with 2. Exploit these biases to improve society!

Answer 25

Ask people would they rather get $10 now or $12 in 2 weeks? A lot of people will say $10 now HOWEVER, when asked people a second question… would they rather get $10 in 50 weeks or $12 in 52 weeks? A lot of people change their answer and choose $12 in 52 weeks instead despite there being the same $2 in 2 weeks difference

Answer 26

a test of slowness - For each of these questions, there is an answer that seems correct at first but if you think slower you will realize that it is wrong - If you did well on this test, it means you think slower and take time to double check your answers

Answer 27

To being patient in general Doing less temporal discounting Better alignment with expected value in general

Answer 28

Answer: 5 cents! (but 10 cents “feels” like the right answer and 21% of you said it!) Explanation: x + y = 1.10 → x + (x+1.00) = 2x + 1.00 = 1.10 → 2x = 0.10 → x = 0.05

Answer 29

Answer: 5 minutes! (but 100 minutes “feels” like the right answer and 18% of you said it!) Explanation: Since 1 machine takes 5 minutes to make 1 widget, 100 machines can simultaneously make 100 widgets in the same 5 minutes since the machines are working in parallel

Answer 30

Answer: 47 days! (but 24 days “feels” like the right answer and 12% of you said it!) Explanation: it is exponential growth, NOT linear growth

Answer 31

1. housefly in men's urinals 2. the default organ donation policy

Answer 32

subtle changes to our environment that cause us to behave in a way that is better for ourselves and others aka some small feature of the environment that attracts our attention and alters our behavior

Answer 33

Richard Thaler (endowment effect) came up with some ideas of how to use these biases for good → wrote a book called Nudge

Answer 34

placing an image of a housefly into the men’s urinals When men are peeing, they are not fully attending to the task at hand and if you give them a target, they will aim at it (in this case the housefly) → as a result, spillage has been reduced by 80% That housefly has become the most well-known example of a nudge

Answer 35

a bias against change and thus a bias for the status-quo (how things are right now)

Answer 36

Organ donations are very low in some countries and very high in other countries → what is the difference between these countries?? (They are culturally similar countries and neighboring countries) Answer: countries with very low organ donations have their organ donation policy as an opt-in policy whereas the countries with very high organ donations have their organ donation policy as an opt-out policy Just making something the default makes it sticky An example of a nudge and causes millions more of people to be organ donors the thought is to take advantage of this status-quo bias for the better good

Answer 37

the process by which doctors interpret their patients’ symptoms and weigh test results in order to arrive at a diagnosis and a treatment plan

Answer 38

opt-in policy: you have to tell the government that you want to be a organ donor opt-out policy: you have to tell the government that you do NOT want to be a organ donor

Answer 39

Pro: necessary in medicine, especially in ERs when physicians most make quick judgements about how to treat a patient on the basis or a few, potentially serious, symptoms Con: however, heuristics can also lead doctors to make grave errors (ie. representativeness errors)

Answer 40

Doctors make such errors when their thinking is overly influenced by what is TYPICALLY true and fail to consider possibilities that contradict their mental templates of a disease → thus attribute symptoms to the wrong cause

Answer 41

the tendency to judge the likelihood of an event by the ease with which relevant examples come to mind

Answer 42

confirming what you expect to find by selectively accepting or ignoring information

Answer 43

the tendency to make decisions based on what we wish were true

Answer 44

1. Decision-makers might believe that defaults are suggestions by the policy-maker, which imply a recommended action 2. Making a decision often involves effort, whereas accepting the default is effortless --> Many people would rather avoid making an active decision about donation, because it can be unpleasant and stressful --> Physical effort such as filling out a form may also increase acceptance of the default 3. Defaults often represent the existing state or status quo, and change usually involves a trade-off

Answer 45

the tendency for people to strongly prefer avoiding losses over acquiring gains despite the losses and gains being of the same magnitude --> Aka the pain of losing something is more impactful than the pleasure from gaining the same thing

Answer 46

1. online experiment with 3 different forms/default choices 2. European real world consent comparison between opt-in and opt-out default policies 3. Analysis of relationship between agreeing to be an organ donor vs actual donations

Answer 47

Online Experiment: In a controlled online setting, 161 participants were asked about their organ donation preferences under different default conditions: 1. opt-in 2. opt-out 3. no default In the opt-in scenario (where participants were not donors unless they chose to be), consent rates were significantly lower The opt-out condition (where participants were donors unless they opted out) nearly doubled the consent rate The neutral condition (no default) showed consent rates similar to the opt-out → This experiment highlighted the strong influence of defaults on decision-making

Answer 48

This study analyzed real-world consent rates across European countries with explicit-consent (opt-in) and presumed-consent (opt-out) policies findings: Countries with opt-out policies showed significantly higher effective consent rates, with about a 60-percentage-point gap between opt-in and opt-out countries

Answer 49

answers the question: Do increases in agreement rates (from presumed-consent policies) result in increased rates of donation? Using a multiple regression model, the analysis found that presumed-consent (opt-out default) policies correlated with a 16.3% increase in donation rates → This suggests that opt-out policies not only raise consent rates but may also lead to a modest increase in actual donations

Answer 50

1. Willing donors who are not identified 2. People who become donors against their wishes Balancing these errors with the good done by the lives saved through organ transplantation leads to delicate ethical and psychological questions