Session 2 : The Simplification trap & The Imitation trap Flashcards
What are heuristics, and how do they influence decision-making ?
Heuristics are mental shortcuts our brain uses to simplify decision-making, excluding irrelevant information to save energy.
Example: When rating your summer, you’ll likely focus on the peak moment and how it ended, rather than considering every detail.
N.B : Heuristics are more relied upon when time is short, which can lead to mistakes
What is the availability heuristic ?
It’s when decisions are based on information that is easily available in memory, often recent or negative, which distorts reality.
Example: After witnessing an earthquake, people are more likely to want anti-seismic houses, though they wouldn’t have considered it before.
N.B : The media tends to focus on bad news, making these events more memorable to the public
What is the anchoring effect in decision-making ?
The anchoring effect occurs when people rely too heavily on the first piece of information they receive, which influences subsequent judgments.
Example: If you’re first given a high price for an item, all other prices will seem relatively cheaper, even if they are still expensive
How does the brain simplify information, and why ? (simplification)
The brain simplifies information because it dislikes ambiguity and wants to resolve it quickly. This leads to jumping to conclusions and mistaking correlation for causation.
Example: People might link ice cream sales to sunburns, but the real cause is the sunny weather pushing people to both buy ice cream and get sunburned
What is regression to the mean, and how does it affect perceptions ?
Extreme events or outcomes tend to revert to more average ones over time. For instance, a professor who has faced continuous travel issues is likely to have more typical experiences in the future.
N.B : Extreme outcomes even out over time without requiring drastic changes
Internal vs. External Factors
How do internal and external factors influence simplification in the social world?
People often attribute outcomes to internal factors (personality, talent) or external ones (the situation).
For example, someone’s success might be attributed to their talent, or external factors like a favorable context
Good Samaritan Experiment
What did the Good Samaritan experiment demonstrate about decision-making ?
The experiment showed that external factors, like being in a rush, significantly impact decision-making more than internal factors, such as one’s personality or motivation.
N.B : this is linked with the fundamental attribution error and the halo effect. The sum of both is the imitation trap
What is the intuition trap in decision-making ?
Intuition can be important in decision-making, but it often leads us astray in strategic decisions. We need to recognize when intuition helps and when it misguides us.
Example: In extreme situations, like a firefighter sensing a building is about to collapse, intuition can be useful. However, in strategic decisions, where environments are unpredictable, intuition is often misleading.
N.B : Strategic decisions are rare, involve ambiguous feedback, and take place in low-validity environments, making intuition unreliable
What are the 2 views on intuition, according to Klein and Kahneman?
Klein emphasizes the value of intuition in real-world, high-pressure situations, such as firefighting.
Kahneman, on the other hand, believes intuition leads to errors, especially in lab settings, where decisions are analyzed scientifically.
Example: A firefighter uses intuition effectively, while a political forecaster’s “expertise” doesn’t lead to more accurate predictions
What are the two necessary conditions for developing real expertise, according to Kahneman and Klein?
- A high-validity environment where things happen predictably (e.g., pressing a button always gives the same outcome).
- Prolonged practice with quick, clear feedback, allowing individuals to learn through experience.
Example: Firefighters and pilots can develop real expertise due to predictable environments and quick feedback. In contrast, professionals like psychiatrists, judges, or traders cannot develop such expertise using intuition
Uncertainty vs. Risk
How do decisions under uncertainty differ from those under risk?
Decisions under uncertainty require different approaches than those under risk. Under uncertainty, the outcomes are unknown, while risk involves calculable probabilities.
N.B : The best decisions under uncertainty often rely on simplicity and robustness rather than complex optimization
Heuristics in Risk and Uncertainty
How do heuristics help in situations of risk and uncertainty?
In risk: Heuristics help balance the accuracy-effort trade-off, allowing us to make faster decisions by sacrificing a little accuracy.
In uncertainty: Heuristics help with the bias-variance trade-off, making decisions quicker when things are unclear, though they may introduce some biases.
Example: In a high-risk environment, relying on heuristics helps people make quicker decisions, even if they lose a bit of precision
Simplicity in Uncertainty
Why is simplicity important in a world of uncertainty?
Complex problems in uncertain environments don’t always require complex solutions. Simple, robust solutions often outperform attempts at optimization in uncertain conditions.
Example: When making decisions in an unpredictable environment, such as in financial markets, simple strategies often work better than overcomplicated models
What does “less is more” mean in decision-making under uncertainty?
More information, time, or complex computations don’t necessarily lead to better decisions under uncertainty. Sometimes, simplifying and using limited information can result in better outcomes.
Example: A baseball player using gaze heuristics to predict where the ball is going illustrates how less information can still lead to the correct decision
