Lecture 9

Question 1

Name the three most influential theorists to do with decision making

Answer 1

Daniel Kahneman. Amos Tversky. Gerd Gigerenzer.

Question 2

Discuss Formal logic and reasoning

Answer 2

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

Question 3

Discuss Logical reasoning

Answer 3

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.

Question 4

Name and explain the two types of logical reasoning

Answer 4

Deductive reasoning - deals with certainty. Inductive reasoning - deals with probabilities and common sense

Question 5

What is a syllogism

Answer 5

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.

Question 6

What is the goal of syllogistic reasoning

Answer 6

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

Question 7

Give an example of syllogistic reasoning

Answer 7

All poodles are dogs, all dogs are animals therefore all poodles are animals.

Question 8

Discuss how syllogisms can cause confusion or inaccuracy

Answer 8

Importance to detect inaccuracies in the premises otherwise the logical conclusion will be inaccurate

Question 9

Discuss deductive reasoning

Answer 9

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.

Question 10

Discuss inductive reasoning

Answer 10

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

Question 11

Discuss the types of error in conditional reasoning

Answer 11

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

Question 12

Discuss neglecting base rates

Answer 12

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

Question 13

What are heuristics

Answer 13

Rules of thumb that are cognitively undemanding and often produce approximately accurate answers

Question 14

What is a representativeness heuristic

Answer 14

Determination of the likelihood of an event based on how similar the event is to previous events

Question 15

What is a conjunction fallacy

Answer 15

Mistaken belief that the probability of a conjunction of two events is great than the probability of one of them

Question 16

Discuss other decision making heuristic’s

Answer 16

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

Question 17

What is hindsight bias

Answer 17

Tendency to think after the fact that they would have known something before the fact when in reality they would not have

Question 18

If heuristics aren’t guaranteed to provide the correct solution, then why do people use them?

Answer 18

Simplify decision making. Don’t always produce a correct decision, but might be good enough most of the time

Question 19

Discuss more closely the representativeness heuristic

Answer 19

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

Question 20

Discuss more closely the availability heuristic

Answer 20

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

Question 21

Give an example of the availability heuristic

Answer 21

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

Question 22

Give an example of an influence on availability

Answer 22

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

Question 23

Discuss biases within the availability heuristic

Answer 23

Any factor besides frequency that calls attention to the event may lead people to overestimate that event’s frequency

Question 24

Discuss salience and vividness bias in terms of availability heuristic

Answer 24

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

Question 25

Discuss confirmation bias

Answer 25

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

Question 26

Discuss the anchoring heuristic

Answer 26

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

Question 27

Discuss fast and frugal heuristics

Answer 27

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

Question 28

Discuss the process of rational decision making

Answer 28

Define problem. Search for alternatives. Identify consequences & probabilities. Estimate costs & benefits. Optimize or maximize

Question 29

What is the goal of good decision making

Answer 29

Maximize the expected value of the return. Expected value = highest monetary value

Question 30

How do we calculate the expected value

Answer 30

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.

Question 31

What is the expected value

Answer 31

The amount of value you would expect to have in the long run if a particular option was selected

Question 32

What is the problem regarding expected value and peoples behaviour

Answer 32

People’s behaviour violates expected value - expected value does not take into account the utility of different psychological choices

Question 33

Discuss the two main assumptions of the prospect theory (Kahenman & Tversky, 1979, 1984)

Answer 33

Individuals identify a reference point generally representing their current state. Much more sensitive to potential losses than potential gains

Question 34

What is loss aversion

Answer 34

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

Question 35

Discuss the expected utility theory

Answer 35

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.

Question 36

What are the violations of the expected utility theory

Answer 36

Certainty effects - tendency to overweight certain gains and avoid certain losses. Preference reversals. Context effects. Framing effects. Sunk costs

Question 37

Discuss invariance and decision making

Answer 37

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).

Question 38

What is description invariance

Answer 38

People will make the same choices no matter how the problem is describe to them.

Question 39

What is procedural invariance

Answer 39

People will make the same choice no matter how you measure their choice

Question 40

Discuss preference reversals

Answer 40

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

Question 41

Discuss context effects

Answer 41

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

Question 42

Discuss the framing effect

Answer 42

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

Question 43

Discuss sunk costs

Answer 43

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

Question 44

Failures of procedural invariance

Answer 44

How we elicit a response also affects people’s judgments.

Question 45

Discuss the limitation of much decision making research and theories

Answer 45

Designed to account for one choice of one action at one time - real life decisions are often more complex and multi-faceted.

Question 46

Discuss bounded rationality

Answer 46

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

Question 47

Discuss satisficing (satisfactory+sufficing) heuristic

Answer 47

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

Question 48

Discuss reducing bias/improving everyday reasoning

Answer 48

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

Question 49

Discuss whether some biases are easier to overcome than others

Answer 49

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