Problem Solving and Decision Making

Question 1

What characterises “thinking”?

Answer 1

• Thinking is the s_ystematic transformation of mental representations of knowledge_ to characterize actual or possible states of the world, often in service of goals.
• Higher-order cognition is built on other aspects of cognition (perception, memory, language)
• Key aspect is creating and using knowledge, rather than extracting knowledge.
• Thinking is built on other aspects of cognition that are imperfect
  
  • Recent in terms of evolution: mostly centered on frontal lobes

Question 2

Who is Piltdown Man and what does he suggest about human cognition?

Answer 2

• 1908 to 1915: fossil parts found near Piltdown, UK; ‘Missing Link’
  
  • Clearly human skull and ape-like jaw
  • Appeared 500,000 years old
  • Reconstruction suggested certain wear patterns on molars, then found
• Problems
  
  • Suggested brain before jaw loss - didnt fit other skulls (ignored contradicting evidence)
  • Piltdown man flouride tests - 50,000yrs old, artificial abraison = HOAX
• Why did we fall for it?
  
  • confirmation bias: fit current theory, ignore contradicting evidence
  • Bystander apathy: experts assume others did the work
  • Emotion: national pride

Question 3

How are heuristics, old information and analogies used in decision making?

Answer 3

• A heuristic is a short-cut used to make up for uncertainty in the environment (by attempting to use what you already know)
  
  • rule of thumb - can be useful but lead to predictable errors like in Monty Hall Problem
  • Substitutes hard questions for easy questions (will it rain today vs is the sky dark today)
• Past information: Often apply what we learned in one situation to new situations
  
  • Analogies: solve electrical flow fault by analogy to water flow
    
    • Priming people on past events influences their responses to current problems

Question 4

What is problem solving? Is it a purely human capability?

Answer 4

• Problem solving is any goal directed behaviour that requires something that isnt immediately available
• Several species are known to exhibit problem solving behaviour
  
  • Crows: demonstrated use of tools (not learned or modelled from humans). Successful fashioning and use of tools 10/17 trials for female.

Question 5

What is the Gestalt approach to problem solving?

Answer 5

• Emphasized importance of changes in perspective, prior knowledge, and assumptions.
• Köhler (1925): studied chimps solving problems.
• Duncker (1945) emphasised analogy
• Approach demonstrated a number of important phenomena, especially restructuring representations

Question 6

What are ‘functional fixedness’ and ‘set effects’?

Answer 6

• Functional fixedness is an inability to break mental sets, leading to a failure to see things in novel ways
  
  • Dunker Candle Problem: Need to use the box the materials came in to solve the problem
    
    • 86% solved when box was empty, 41% when not
  • Apollo 13
• Set Effects are when previous solutions remain in the brain and block generation of new solutions
  
  • Water Jug problems: given a series of difficult waterjug problems then given a simple one with easy and hard solutions. People overlook simple solution
  • Can be very long lasting: Le Verrier used newtons laws to find neptune from anomilies in uranus orbit - thought mercury’s wobbles same cause until he died

Question 7

What is the ‘Problem solving as a search’ (Problem Space theory) approach to problem solving?

Answer 7

• Newell & Simon (1970) proposed problem solving as a search through a problem space of possibilities
  
  • Search can be physical or mental
  • Can’t be exhaustive search (e.g., chess), so need strategies
• Start with situation we want to transform into something new. Do so by applying the different options we have.
• Terminology
  
  • State: Specification of situation.
  • Goal: The desired state.
  • Operator: An action that changes one state into another.
  • Solution: A sequence of operators that transforms initial state into goal.
  • Constraints: Restrictions on what can be done.

Question 8

What is the ‘generate test’ strategy in problem solving as a search?

Answer 8

• Generate Test: Randomly generate solution, then test it.
• Advantage: requires no knowledge
• Disadvantage:
  
  • sometimes ineffectual (Generation may be hard, testing could be hard, search space may be very large).
  • May reach solution too slowly

Question 9

What is the ‘difference reduction’ strategy in problem solving as a search?

Answer 9

• Difference Reduction: Try to reduce difference between current state and goal state
• Advantage:
  
  • Steps can be small,
  • don’t have to know much, just what gets you closer
• Disadvantage:
  
  • Requires some knowledge,
  • it may not be possible (or desirable) to get closer on each step

Question 10

What is Means-End Analysis?

Answer 10

• Involves dividing the task into subgoals in order of importance/requirements
  
  1. Compare current state to goal state and identify differences
  2. Select an operator to reduce the largest difference.
  3. If operator cannot be applied set subgoal of creating preconditions for its application.
  4. Return to (1) until goal is reached
• Example: Tower of Hanoi
  
  • goal to move all disks to different arrangement
  • set subgoals - move 1st disk

Question 11

What is the evidence for Means-End analysis as a problem solving search strategy?

Answer 11

• Evidence from verbal protocols (Anderson, 1983)
  
  • People often spontaneously set subgoals.
• Catrambone (1995): better performance in math problem solving when instructed to set subgoals.
• Egan & Greeno (1974): a problem becomes more difficult with more subgoals.
  
  • Probability of error increased with the number of subgoals necessary.
• Patsenko & Altmann (2010) showed that people were not using detailed planning in Tower of Hanoi
  
  • Changing number of disks during task did not change actions

Question 12

What are the advantages and disadvantages of problem space theory?

Answer 12

• It’s a normative theory: specifies ideal
  
  • People are often not so systematic
• Provides a framework for thinking about problem solving.
  
  • Not refutable
• Disadvantage: underplays the role of knowledge in problem solving.
  
  • Both representation and process are important

Question 13

What is the knowledge and problem solving approach?

Answer 13

• Role of knowledge:
  
  • Knowledge can eliminate problem solving. If know the solution, then no problem.
  • Knowledge can provide us with the most creative solutions e.g., analogies
• But knowledge can be a barrier to problem solving if given wrong constrains
  
  • Unecessary constraints can be part of the representation
    
    • Insight problems: incubation reset
  • Hints : 25% solve with hint, none without - hint is required to solve

Question 14

What is the role of transference in forming representations in problem solving?

Answer 14

• Transference is the application of old knowledge to a new problem
  
  • Negative transfer: functional fixedness and mental set
  • Positive transfer: using prior knowledge to help you solve a problem
    
    • eg Analogies
• Analogies - positive transfer example
  
  • used in standardised tests of intelligence, often a basis of creative solutions
  • transference of analogies can be used over long periods of time
    
    • 7 days after tutorial, 3 weeks if repeated
  • Example: those who landed on ‘convergent’ solution, given analogy first, given analogy and hint

Question 15

What is decision making?

Answer 15

• Choosing between options on the basis of the available information.
  
  • Not reasoning (which derives new conclusions from available information.) but often intertwined.
  • Requires judgment: Could just calculate expected values (but we dont always have the info)
• Primary obstacle is uncertainty

Question 16

What evidence is there that people tend to discount value for uncertainty?

Answer 16

• Discount value: ​People tend to discount outcomes for uncertainty
  
  • Green et al (1999) found people would take below expected value when uncertain (chance/value not linear).
  • Can change for very low odds
  • Discount $100,000 more than $200
• Future uncertainty: Prefer $100 now to $100 next week
  
  • Hyperbolic line: discount more in the shorter term than longer (years)
  • Kids discount future more than young adults and than older.
    
    • Level of trust in the future, percieved stability
  • Men discount more after looking at pictures of “hot” women
    
    • emotional - present grounding?

Question 17

What is Expected Utility?

Answer 17

• The Expected Utility Hypothesis:
  
  • Utility is calculated by considering the value of each possible outcome and constructing a weighted average, based on probability of each option.
  • Chose the outcome with highest expected utility
    
    • Eg buying car: desired outcomes are economy and relaibility, car A has 60% e, 40% r, utility = .6e +.4r
• In practice
  
  • Deal or No Deal: bank offers less than the EV
  • Shows that people don’t tend to actually use EU theory
    
    • Subjective goals = satisficing (aim for X amount not best amount)
    • discount for uncertainty = more risks on higher amounts
    • losers/winners take more risks = effect of past decisions

Question 18

What are some problems with Expected Utility theory?

Answer 18

• Often doesn’t fit to empirical data.
  
  • Leads to various paradoxes: EU shouldn’t be affected by the past but it is (deal or no deal)
  • Doesnt explain “Sunk cost” fallacy
  • doesnt fit with the effect of irrelevant info on decisions
• Probabilities and utilities may be subjective, based on our own experience.
  
  • Could represent individual beliefs
  • The outcome goal is not always the “best” option
    
    • Satisficing = operating under cognitive constraints
  • Savage (1954) developed subjective expected utility theory.
• Can think of expected utility theory as a normative theory

Question 19

What is the overconfidence bias and how is it adaptive?

Answer 19

• Overconfidence bias is when a persons subjective confidence in their own judgements is substantially higher than their objective accuracy
• Examples:
  
  • CFOs asked to predict S and P index over a number of years
    
    • no correlation between estimates and index
  • Asked CFOs to give a 90% confidence range
    
    • predicting a 20% ‘suprise’ rate, actually 67%
• Advantages
  
  • Underconfidence may be even more problematic (inability to make decisions, existential dread etc)
• Disadvantages:
  
  • Bias greater in more difficult tasks
  • Bias grows with information aquisition regardless of accuracy

Question 20

What is the Availability heuristic?

Answer 20

• Availability heuristic = Judgments based on ease with which relevant instances can be retrieved from memory
  
  • Based on ease not number of recall
  • effected by media
• Benefits
  
  • memories strengthened by repetition, indicates importance
  • ease of recall in 7s good indicator of total knowledge in 2m
• Disadvantages
  
  • Can lead to systematic errors
    
    • Judging anecdotal evidence over empirical evidence
    • words starting with R vs words with R as 3rd letter

Question 21

Give some examples of the availability heuristic

Answer 21

• Ease vs Amount Schwarz, et al Assertiveness study
  
  • Recall either 6 or 12 instances you were assertive, 6-group rated the task easier
  • 6 group rated themselves more assertive
• Probability and consistent errors (Slovic, Fischhoff, & Lichtenstein study):
  
  • rated death by fire more probably than death by drowning
  • rated plane-crash, cancer, earthquakes as killing more people than driving
  • Consequences: People risk driving instead of ‘more dangerous’ flying
• 9/11: terrorism exploits the availability bias
  
  • Severe rise in road fatalities after 9/11 due to driving instead of flying to destinations

Question 22

What is the Representativeness Heuristic?

Answer 22

• representativeness heuristic: If something or someone appears to fit a category, you will use what you know about that that category to make judgments
• Examples:
  
  • coin flip: which sequence is more likely, choose one that includes the other - representativeness over probability (shorter sequence always more likely
  • Rate probability of Steve being a librarian or a librarian who also does yoga, or a librarian vs a sales person (many more sales people in US)
• Disadvantages
  
  • Ignore base rate information: given probabilities, people will choose representativeness instead

Question 23

What is the Loss Aversion Bias? How does it relate to the endowment effect?

Answer 23

• Loss aversion refers to the tendency for people to strongly prefer avoiding losses than acquiring gains
  
  • Described by Kahneman & Tversky’s Prospect Theory**​
  • Eg many people reject a 50-50 bet in which they can win $200 but lose $100
• The Endowment effect: Sellers vs Choosers:
  
  • Sellers given mug to sell, choosers asked how much they would pay
  • Reframed: sellers ‘lose’ mug, choosers ‘gain’ mug
  • Sellers place a higher price on “whats mine”
• Adaptive: losses can threaten survival

Question 24

What is the Status Quo Bias?

Answer 24

• Status quo bias is an emotional bias; a preference for the current state of affairs.
• Related to loss aversion (which maintains status-quo)
• Example:
  
  • Samuelson & Zeckhauser (1988): you have inherited a large amount money as blue-chip shares, risky shares, T-bills or bonds.
  • Allowed to change to any other ‘form’ at no cost
  • People show strong tendancy to stick with original form

Question 25

What are framing effects?

Answer 25

• Framing effects change the representation of the problem and the way the options are evaluated
• Example: Context of coin toss:
  
  • People took more risks to avoid ‘loss’
  • assume you are $1000 richer, choose between sure gain of 500 or chance of 1000 vs assume you are $2000 richer, choose between loss of 500 or chance of loss of 1000
• Real world applications
  
  • Organ donation rates: rates in opt-in vs opt-out programs
  • Should we use this to ‘nudge’ people toward positive policy?

Question 26

How can irrelevant infomation effect decision making?

Answer 26

• We are good at comparison, poor at absolute valuations. Contradicts EU theory which expects each option to be evaluated independently
• Simonson & Tversky (1992) offered two possible payments for doing an experiment:
  
  • Take $6 or a nice pen: 36% nice pen, 64% take cash,
  • Take $6, nice pen, or cheap pen: 2% cheap pen 46% take nice pen, 52% take cash
• Real World Applications
  
  • SMH Subscription options: making a bad subscription option promotes choice
  • Doctors more likely to prescribe drug if given 2 options

Question 27

What is anchoring and adjustment?

Answer 27

• Anchoring is the tendency to rely too heavily on the first piece of information offered, choosing to adjust from the “base rate” by small variations
• Example:
  
  • Tversky & Kahneman: you have Job A or Job B, but must change to Job X or Y
    
    • job A is more similar to job X, Job B is more similar to job Y
    • People consistently choose the job most similar to the prime
  • Judges sentencing: roll dice and say whether sentence should be more or less in months - significantly changes initial sentence

Question 28

Give an example of how people ignore base rates and its implications

Answer 28

• Tversky & Kahneman Base rate neglect:
  
  • Given the percentages of people at a party, will still decide on most likely profession ignoring this base likelihood
• HIV: Lots of low-risk people are tested each year
  
  • If you are low risk and test positive what is the likelihood you have HIV?
    
    • rate of false positives = 0.01%, HIV rate 0.01% in low risk group
    • If testing 10million low risk chance of false postive = >50%
    • if testing 10 million high risk chance of false positive = >1%
• Implications
  
  • Testing whole population for HIV is impractical
  • Getting whole body scans initially, vs initial diagnosis and subsequent specific tests

Question 29

What are the adaptive benefits of heuristics and biases?

Answer 29

• We have limited memory, cognitive capacity, and time, so make the best decisions we can rather best that are possible
  
  • Bounded Rationality
• Use fast & frugal heurstics
  
  • during emergencies, or risk assessment decisions need to be made fast
• We pick-up a lot of valid information from environment - assuming a city you recognise the name of is larger than one you don’t is usually accurate
• Making good enough decisions, not the best decision