Lecture 9 Flashcards
Name the three most influential theorists to do with decision making
Daniel Kahneman. Amos Tversky. Gerd Gigerenzer.
Discuss Formal logic and reasoning
People are generally not good at solving problems when they are presented in an abstract manner. General world knowledge almost inhibits our ability to provide the logical response to logic problems
Discuss Logical reasoning
Normative theory for human reasoning. Developed over centuries by mathematicians/philosophers. Deductive reasoning - deals with certainty, argues from the general to the specific, argues that conclusion necessarily follows from initial premises or hypotheses. Inductive reasoning - deals with probabilities and common sense - an educated guess, suggests truth but does not ensure it.
Name and explain the two types of logical reasoning
Deductive reasoning - deals with certainty. Inductive reasoning - deals with probabilities and common sense
What is a syllogism
3 Statement logical form with the first 2 parts stating the premises or statements taken to be true, and the third part starting a conclusion based on those premises.
What is the goal of syllogistic reasoning
To understand how different premises can be combined to give logically true conclusions. Also helps us to understand what combination of premises lead to incorrect conclusions
Give an example of syllogistic reasoning
All poodles are dogs, all dogs are animals therefore all poodles are animals.
Discuss how syllogisms can cause confusion or inaccuracy
Importance to detect inaccuracies in the premises otherwise the logical conclusion will be inaccurate
Discuss deductive reasoning
A valid deductive inference is one that follows logically from the premise: If it is raining, then I will get wet - it is raining, therefore I will get wet. An argument is sound if it is valid and the premises are true - but an argument can be valid but not sound - premise is false.
Discuss inductive reasoning
Goes beyond the information given by the premise. An inductive inference can produce a true conclusion but it will not necessarily follow from the premise. E.G. many speeding tickets are given to teenagers - therefore all teenagers drive fast
Discuss the types of error in conditional reasoning
Form of the reasoning problem - draw incorrect conclusions by either denying the antecedent or affirming the consequent inaccurately. Illicit conversion of the problem - reverse the if-the propositions. Search errors - search for positive or confirming evidence. Memory-related errors - increased load on working memory can interfere with the reasoning process - increased complexity
Discuss neglecting base rates
Base rate information - relative frequency of an event within a population - Kahneman & Tversky (1973) - participants asked to decide whether Jack is an engineer or lawyer - participants decided there was a 0.90 probability that Jack was an engineer - took no account of the base-rates of the sample
What are heuristics
Rules of thumb that are cognitively undemanding and often produce approximately accurate answers
What is a representativeness heuristic
Determination of the likelihood of an event based on how similar the event is to previous events
What is a conjunction fallacy
Mistaken belief that the probability of a conjunction of two events is great than the probability of one of them
Discuss other decision making heuristic’s
Availability - determination of the likelihood of an event based on how available information about the event is to the decision maker’s memory. Anchoring - assessment of an event based on some known value or historical precedent; some adjustment from the initial value is mad;the adjustment is typically insufficient
What is hindsight bias
Tendency to think after the fact that they would have known something before the fact when in reality they would not have
If heuristics aren’t guaranteed to provide the correct solution, then why do people use them?
Simplify decision making. Don’t always produce a correct decision, but might be good enough most of the time
Discuss more closely the representativeness heuristic
Basic tendency to estimate the likelihood of something on the basis of how well it fits a prototype of a familiar category. When people estimate the probability of an event by - how similar the event is to the population of events it came from OR whether the event seems to be similar to the process that produced it. Assessments of a situation are based on the similarity to your mental representation of a hypothesized situation
Discuss more closely the availability heuristic
When people make estimates of likelihood, their estimates are influence by the ease with which relevant examples come to mind. But the ease with which we remember examples is not perfectly correlated with objective frequency, hence errors may arise when using this heuristic
Give an example of the availability heuristic
Which are there more of: Words that start with the letter K, or words that have the letter K as their third letter? Most people say start with the letter K because it’s easier to think of examples. But there are actually 3 times as many words with K as the third letter/ Think also about egocentric contribution to team activities: own contributions more available, selective encoding and retrieval
Give an example of an influence on availability
Media coverage and bad new bias - Plane crashes: it’s 22 times safer flying in a commercial jet than travelling by car. Stranger abductions: less than 1% of the 800,000 children abducted were abducted by strangers
Discuss biases within the availability heuristic
Any factor besides frequency that calls attention to the event may lead people to overestimate that event’s frequency
Discuss salience and vividness bias in terms of availability heuristic
Events that are more vivid or salient are rated more likely than those that are not - people tend to overestimate the frequency of deaths by an exciting cause and underestimate frequency of death by mundane cause
Discuss confirmation bias
Positive-test strategy: Look for the presence of cases that confirm the hypothesis. Tends to lead to biased conclusions when stimuli are complex such that cases exist that fit the hypothesis, regardless of whether the hypothesis is actually true. A person that believes in the abilities of a psychic will tend to pay attention to the successes and ignore the failures
Discuss the anchoring heuristic
After forming a belief, people are biased not to abandon it - primacy of info increases its weighting in judgments. E.G. when showed intelligence suggesting that there was no evidence that Iraq was trying to acquire uranium from Niger, administration officials stuck to the belief that Iraq was trying to acquire uranium
Discuss fast and frugal heuristics
Start with an aspiration level and then choose the first object encountered that satisfies this level - take the best, ignore the rest. Cuts down time spent shopping or finding a soulmate. Sufficing strategies - place few demands on memory and other cognitive processes and can cope with limited knowledge
Discuss the process of rational decision making
Define problem. Search for alternatives. Identify consequences & probabilities. Estimate costs & benefits. Optimize or maximize
What is the goal of good decision making
Maximize the expected value of the return. Expected value = highest monetary value
How do we calculate the expected value
List all potential outcomes, along with their value. Calculate probability of each outcome. Multiply probability of each outcome by value of each outcome. Sum the resulting values.
What is the expected value
The amount of value you would expect to have in the long run if a particular option was selected
What is the problem regarding expected value and peoples behaviour
People’s behaviour violates expected value - expected value does not take into account the utility of different psychological choices
Discuss the two main assumptions of the prospect theory (Kahenman & Tversky, 1979, 1984)
Individuals identify a reference point generally representing their current state. Much more sensitive to potential losses than potential gains
What is loss aversion
Not only do people have a biases against losses, they weigh the value of a loss as greater than that of a gain. The utility of a gain is seen as much less than a loss of the same value. People UNDERESTIMATE the utility of gain and OVERESTIMATE the utility of a loss
Discuss the expected utility theory
Similar to the expected value theory but acknowledges value of an outcome may depend on decision makers goals. Expected utility = highest psychological value - people try to maximize the expected utility of an outcome, utility is the subjective value to the individual. Not always the same as the objective value.
What are the violations of the expected utility theory
Certainty effects - tendency to overweight certain gains and avoid certain losses. Preference reversals. Context effects. Framing effects. Sunk costs
Discuss invariance and decision making
Ideally, people should show 2 types of invariance - Description invariance (people will make the same choices no matter how the problem is described to them) or Procedural invariance (people will make the same choice no matter how you measure their choice - ranking, multiple choice etc).
What is description invariance
People will make the same choices no matter how the problem is describe to them.
What is procedural invariance
People will make the same choice no matter how you measure their choice
Discuss preference reversals
If you value A more than B, you should always choose A - but this is not always the case Shafir, 1993. Choice 1 = you must choose one of the courses to sign up for. Choice 2 = you are enrolled in both, but must drop one. The rate of rejection is almost equal
Discuss context effects
Choosing between A and B should not be affected by what other alternatives are present. Context effects = evaluations of one option are influenced by the presence of other options, e.g. attraction effect = having a third choice that is dominated by one of the two choices makes that one more attractive
Discuss the framing effect
You are sick with a fatal rare disease, which treatment do you prefer? A - a new treatment that has a 90% survival rate. OR B - a new treatment that has a 10% mortality rate. Most choose A, because the way the problem is worded, information presented in different forms can lead to different decisions despite the options having the same outcomes
Discuss sunk costs
Rationally, we should not consider sunk (unrecoverable) costs - would you walk out of a bad film? People often (mistakenly) continue to pursue failing projects due to sunk costs
Failures of procedural invariance
How we elicit a response also affects people’s judgments.
Discuss the limitation of much decision making research and theories
Designed to account for one choice of one action at one time - real life decisions are often more complex and multi-faceted.
Discuss bounded rationality
Realistic approach to complex decision-making “produce reasonable or workable solutions to problems in spite of our limited processing ability by using various short-cut strategies”. Decisions are bounded by environmental constraints
Discuss satisficing (satisfactory+sufficing) heuristic
Sometimes people make a decision that is good enough - satisficers (content with reasonably good decisions) happier and more optimistic than maximizer’s. People consistently limited the amount of information. Not so optimum in contexts where error has significant outcomes
Discuss reducing bias/improving everyday reasoning
Exposure to the probabilistic sciences could help. Test statistical and methodological reasoning of graduate students in Psychology, medicine, chemistry and law. NO differences before graduate training. AFTER two years: 70% improvement for psychology students. 25% improvement for medical students. NO improvement for chemistry or law students
Discuss whether some biases are easier to overcome than others
When it is possible to identify the influence of biased processing on one’s judgments, AND one knows the appropriate alternate strategy to apply, bias may be reduced. When bias is due to deliberate strategy, investing effort to modify that strategy can be helpful. BUT bias is often caused by unconscious or uncontrollable mental processes. In these cases it may be extremely difficult to overcome the effects of bias
