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Complex Cognition > TASK 5 - DECISION MAKING > Flashcards

TASK 5 - DECISION MAKING Flashcards

1
Q

decision making

A

= process of selecting a choice from all the available options

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2
Q

stages of decision making

- theory of natural decision making

A
  1. setting goals: goals influence decisions; decisions are steps toward something you want to accomplish
  2. gathering information: know what the options, consequences are
  3. decision structuring: organise all information (listing options + criteria for deciding among them)
  4. making final choice
  5. evaluation
    √ flexibility in phase order (if struggling, returning to previous phases)
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3
Q

cognitive illusions

A

= errors of cognition that come about for understandable reasons and that provide information relevant to understanding normal functioning –> systematic biases
- heuristics = rules of thumb; strategies that ignore part of the information with the goal of making decisions more quickly

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4
Q

cognitive illusions

- framing effect

A
  • description frames the decision (e.g. 2 gas stations)
  • “context effect” in decision making
  • changing description can lead people to adopt different reference points
  • loss aversion
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5
Q

cognitive illusions

- anchoring

A

= rely too much on an initial piece of information offered (= anchor) when making decisions

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6
Q

cognitive illusions

- sunk cost effects

A

= greater tendency to continue something once one has invested in it
- due to emotional investment, you are too invested in one ida and unwilling to quit

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7
Q

cognitive illusions

- illusory correlation

A

= seeing a relationship between variables even when there isn’t any
- typically have some prior associations in peoples’ minds

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8
Q

cognitive illusions

- hindsight bias

A

= tendency to exaggerate what could’ve been anticipated in foresight when looking back in hindsight
- once you know how a decision turned out, events leading up to outcome seem more inevitable than they really are

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9
Q

cognitive illusions

- confirmation bias

A

= only gather information consistent with prior hypothesis/information confirming previous idea

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10
Q

cognitive illusions

- overconfidence

A

= people’s impressions of own accuracy are inflated; arrogance
- fail to see need for help

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11
Q

cognitive illusions

- omission bias

A

= tendency to prefer inaction to action when engaged in risky decision making
- anticipated regret: greater when unwanted outcome caused by own actions rather than inaction
- status quo bias = decision avoidance; preference for maintaining the status quo (present state) rather than acting to change one’s decision
x action bias = don’t just sit there, do something

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12
Q

cognitive illusions/bounded rationality

- saitsficing

A

= strategy that aims for a satisfactory/adequate result, rather than the optimal solution

  • “good enough” rather than expending effort/resources on finding best possible/optimal choice
    1. satisficers = people content with making reasonably good decision; were happier and more optimistic, greater life satisfaction, less regret (not found in Chinese)
    2. Maximisers = perfectionists
  • Simon
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13
Q

cognitive illusions

- fast-and-frugal heuristics

A

= heuristics involving rapid processing of relatively little information
- take the best, ignore the rest
x why do we have capacity of logical reasoning if we could always follow gut feelings
x more complex than suggested –> often not sufficient knowledge of validities

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14
Q

fast-and-frugal heuristics

- availability heuristic

A

= instances that are more easily thought of/accessible, stand out more in one’s mind

  • own behaviours more prevalent to us than that of others
  • failure to include base rate info in probability estimation
  • availability by recall (number of instances recalled) vs. fluency mechanism (how easy it WOULD be to recall without actually retrieving from memory)
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15
Q

fast-and-frugal heuristics

- representativeness heuristic

A

= representatives/typical members of a category are encountered more often

  • failure to include base rate info
  • mistaken belief in the law of small numbers: people expect small sample to show same proportions as large sample
  • gambler’s fallacy: mistaken belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future
  • conjunction fallacy: mistaken belief that the probability of a conjunction of 2 events (A & B) is greater than the probability of one of them
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16
Q

fast-and-frugal heuristics

- recognition heuristic

A

= using knowledge, that only one out of two objects is recognised, as basis for making a judgment; selecting object that is recognised in preference to the one not recognised (recognise cologne not Herne, decide cologne is bigger)
- exploits lack of knowledge
x more complicated than assumed –> consider why they recognise and object + decide then whether to use

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17
Q

base rate fallacy

A

= cognitive error whereby too little weight is placed on the base (original) rate of possibility
base rate information = the relative frequency of an event within a given population

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18
Q

utility models

A

= we try to maximise utility (subjective value we attach to an outcome)

  • normative models = define ideal performance under ideal circumstances
  • prescriptive models = show how we ought to make a decision (= consider that circumstances aren’t ideal and show how to best decide)
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19
Q

utility models

- expected utility theory

A

= trying to assess the subjective utility of certain objects

  • normative model: ideal performance under ideal circumstances
  • expected value (EV= ∑(p×v)): determine to choose the one with the higher value & see how much money you should spend
  • expected utility (EU= ∑(p×u)) = (probability of a given outcome) x (utility of the outcome): captures ideas of happiness, pleasure & satisfaction that comes from achieving goals (= psychological rather than monetary value)
20
Q

limitations of expected utility theory

A

x calculation of EU difficult: info about several aspects of the decision must be integrated (various factors and goals)
x only accounting for making final selection from a set of alternatives –> not making decisions with “status quo vs. make a change” option
x doesn’t describe processes by which people structure a decision (= gather info and lay out possibilities + parameters)

21
Q

utility models

- multi-attribute theory (MAUT)

A
  • ideal strategy –> bounded rationality (more realistic)
    1. break a decision into independent dimensions
    2. determine relative weights of each dimension (= subjective value)
    3. list all alternatives
    4. rank alternatives along dimensions
    5. multiply ranking by weighting of each alternative to determine final value
    6. choose alternative with highest value
  • normative model: if people follow MAUT they will maximise own utility in a way that is best for achieving all their goals
  • dimensions must be chosen carefully
  • person would be willing to choose an alternative that was not highest on the highest ranked dimension when the relative position on other dimensions compensates for that
22
Q

limitations of multi-attribute utility theory

A

x elimination by aspects (descriptive model): when decision makers have too much info to deal with they don’t take all dimensions into account but rather select one factor, pick a threshold value and everything that exceeds that threshold value is tossed
x Homo economicus assumed: too rational
x procedure too complex
x set of relative dimension can not always be worked out; not clearly separate from each other

23
Q

descriptive models

A

= simply detail what people actually do when they make decisions (= actual performance); what people ACTUALLY do

24
Q

descriptive models

- bounded rationality

A

= people are as rational as their processing limitations permit

  • produce reasonable/workable solutions to problems in spite of our limited processing ability (heuristics)
  • unbounded rationality = if all the information you need, could choose best choice
  • Simon
25
Q

limitations for rational decision making

A
  • cognitive constraints: limited capacities for information processing
  • environmental constraints: not enough information about alternatives + consequences; limited time/resources
  • -> use of heuristics
26
Q

descriptive models

- image theory

A
  • pre-choice elimination
    = ask themselves whether a new goal/plan/ alternative is compatible with 3 images
    1. value image: decision maker’s values, morals, principles
    2. trajectory image: goals & aspiration for the future
    3. strategic image: way in which decision maker plans to attain his/ her goals
  • incompatible with at least one of images drop out from further consideration
27
Q

descriptive models

- recognition-primed decision making

A

= experts most likely rely on intuition, mental simulation, making analogies, recalling/creating stories when deciding; compare/recognise current situation to one encountered before

  • expert decision making
  • relevant when decisions must be made rapidly
  • when situation familiar/typical: experts match situation to learned patterns of information stored in LTM (pattern recognition) –> retrieval of a single option –> mental stimulation –> if imagined outcome satisfactory that option determines actions
  • when situation not familiar: diagnose situation further (story building, more data)
  • Klein
28
Q

descriptive models

- prospect theory

A

= decisions based on evaluation of potential value of losses and gains, using heuristics
- editing: identify reference point (subjective), generally representing current state
- evaluation: loss aversion
- Kahneman; graph
x partly explains value function
x does not include social/emotional factors
x framing depends on individual differences
x probability of rare events is underrated

29
Q

descriptive models

- constructivist approach

A

= cultural representations are dynamic schemas rather than ever-present personality traits; switch between cultural frames in response to situational cues
- explains how people can be fluent in more than one culture without simply blending their biases

30
Q

self-other decision making

A

= making choices for others involves less loss aversion than making choices for self

  • making decisions for others gives us a feeling of power which makes us less sensitive to losses + seek more info when making decisions for others
  • omission bias greater for self
31
Q

self-construal priming on risk taking

A

= everybody has 2 co-existing selves in their memory: one independent + one interdependent

  • cultural differences stem from likelihood of sampling one or the other (depending on social role & situation)
    1. primed on an interdependent self: less likely to take social risks than those primed on independence
    2. primed on interdependence: more likely to take financial risks
  • cushion hypothesis: social network acts as safety net; riends & family members offer a cushion that lessens effect of financial loss but magnify embarrassment of a social misstep
32
Q

dual-process theory

- Kahneman

A

system 1: intuitive, automatic, effortless; heuristic-based
system 2: analytical, controlled, rule-based; more concscious
- serial processing
x assumes that people mostly use system 1
x oversimplification: people also rely on base-rate information in system 1/rapid judgments
x people can show strong biases even when using system 2 –> error-prone performance not only system 1
x serial processing is difficult to detect

33
Q

endowment effect

A

= tendency for owners (potential sellers) to value objects more than potential buyers; simply owning an object can enhance its perceived worth
= self-object-association + self- enhancement bias
= enhancement of object’s perceived value
- smaller effect for Easterners (= faster in switching technologies etc.)
–> interdependent self: self-criticising
–> independent self: self-enhancing

34
Q

natural frequency hypothesis

A

= better/more accurate judgment with natural frequencies than percentages
- people are naturally equipped to think about frequencies rather than probabilities
x benefits of frequency formats do not occur when using steps to avoid obvious version
x truly natural sampling may not be possible at all
x high demands on memory

35
Q

rational-emotional model

A

= account for decision avoidance; decision Making based on rational factors
- omission + status quo bias: explained with regard to regret and fear (= fear can be reduced when someone decides not to make a decision at that time)

36
Q

social functionalist approach

A

= takes into account social context of decision making

- people = intuitive politicians –> justify decisions to others

37
Q

nudging

A

= steer people in a particular direction while still allowing them to go their own way (a subtle way of influencing behaviour); help them make good decisions without coercing them

  • alter “choice architecture” (= background against which choices are made)
  • default rules/ options: option a decision maker will obtain if he/she does nothing
  • -> establish status quo/reference point for counting changes as losses or instead as gains
  • -> depends on the costs of the decision + the cost of error
  • -> often thought to be most effective nudge (fail when strong antecedent preferences or opposed with counternudges)
  • Thaler
  • uber tricks
38
Q

nudging ineffective when…

A

x based on inaccurate understanding of behaviour
x info is too confusing/complex (unaffected by it)
x people show reactance: reject an official effort to steer just because it’s an official effort to steer
x they have short-term effect
x it influences desired conduct + produce compensating behaviour (rebound effect) –> nullifies overall effect

39
Q

responses to failed nudging

A
  1. do nothing: failure might show that there is no problem at all
  2. nudge better/different when convinced that people’s choice is not promoting their welfare
  3. fortify/defend effects of nudge with a more aggressive approach (e.g. counter-counternudges or bans)
40
Q

availability heuristic

- support theory

A

= event appears more/less likely depending on how it is described; distinguish between events and descriptions of those events
- more explicit event descriptions have greater subjective probability, BECAUSE
1. explicit description often draws attention to aspects of the event less obvious in non-explicit description
2. memory limitations prevent people from remembering all the relevant info if it is not supplied
x oversimplification
x explicit descriptions can reduce subjective probability if they lead individuals to focus on low-probability causes; if they are hard to understand

41
Q

dual-process theory

- logical intuition model

A

= there is rapid, intuitive processing (system 1) of heuristic and intuitive logical processing (base rates) which is sometimes followed by deliberate system 2 processing
improvements to dual-process:
√ heuristic and base-rate information can both be rapidly accessed through intuitive processing

42
Q

prospect theory

- loss aversion

A

= treat losses more seriously than gains of the same amount (care more about losing than winning a dollar)
- loss neutrality = participants do not favour one option over other unless stakes are high

43
Q

bounded rationality

- elimination-by-aspects theory

A

= decision makers eliminate options by considering one relevant attribute/aspect after another
√ useful at early stages

44
Q

elimination-by-aspects theory

- two-stage theory

A

= modified version of elimination-by-aspect

  1. initial stage: elimination-by-aspects –> only options meeting certain criteria are retained
    - reduce options to manageable number
  2. second stage: detailed comparisons of patterns of attributes of retained options
    - -> few options switching to more complex strategy (multi-attribute utility theory)
45
Q

different search strategies

A
  1. focused search: focus on small number of carefully selected potential options
    a. correlated positively with satisfaction with option
  2. exploratory search: taking into account several options making use of several information sources
  3. haphazard search: non-strategic approach; resembles trial and error
    a. correlated negatively
46
Q

unconscious thought theory

A

= conscious thinking is constrained by limited capacity of consciousness; unconscious thinking is better at integrating large amounts of information
- conscious thought can follow strict rules (well suited to rule-based problems)
- unconscious though better when decision complex
- optimal: combination of conscious + unconscious thought
x inconsistent findings
x rely heavily on intuitive processes

Complex Cognition (9 decks)

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