Week 12 Flashcards
Decisions
- The process of making choices between alternatives
- A commitment to a course of action
Choice Behaviour
The Behavioural view of decision making
An individual selects from an array of alternatives to access reinforcement
eg: choosing to study over going out
Dual Systems Approach to Thinking
- Kahneman 2011
- Two Mental Systems
- System 1 - fast, automatic, intuitive, nonconscious
- Sysetm 2 - Slower, deliberate, conscious, controlled
- Day to day stuff handled by System 1
- System 2 comes into play when we need to be thoughtful
What Makes it a Good Decision
- Good decisions are better than bad decisions are bad
- People tend to rate their bad decisions as significantly less important than good decisions
- The experienced outcome is what classifies decisions as good or bad
- The quality of a decision is overwhelmingly dominated by outcome.
Expected Utility Theory
- People are rational if they have all relevant information
- Results in maximum expected utility
- Desirable because in our best interests
- Helps us decide what will be best outcome
- People don’t always choose optimum strategy
Expected Utility
- People do not usually follow the best decision making procedures
- Most people picked the large bowl despite lower odds
Prospect Theory
People identify a reference point that defines their current state of mind
People are more sensitive to potential loss than to potential gain
Known as loss aversion
Loss Aversion
- Individuals are much more sensitive to potential losses than to
potential gains
Emotions and Decision Making
- Emotions play a role in decision making
- People with Prefrontal Cortex damage have flattened emotions
- Also inability to respond to emotional events
- Have impaired decision making
- Perhaps because it is difficult evaluate emotional outcome that result from decisions
Anxious Decision Makers
Anxious people tend to avoid potentially negative consequences
Maner & Schmidt 2006
Paulus & Yu 2012
Optimistic Decision Makers
- Optomistic people more likely to ignore negative information and focus on positive
- Could be causing base decisions to be made on incomplete information
- Too much optimism may lead to poor decision making
- Izuma & Adolphs 2011
- Sharot et al 2011
Expected Emotions
- What people predict they will feel for a particular outcome
- People inaccurately predict their emotions
- Can lead to Risk Aversion
Risk Aversion
Tendency to avoid taking risks
Expected Emotions Outcomes
- Deborak Kermer & Co 2006
- They gave subjects $5 and told them that based on a coin flip they would either win an additional $5 or lose $3.
- People greatly overestimate the expected negative effect of losing (left red bar), compared to the actual effect of losing (right red bar).
Why do people overestimate their negative feelings
Perhaps because we don’t take coping mechanisms into account
Unprepared for dealing with adversity
Incidental Emotions
- Emotions not connected to decision making
- Related to personality & disposition, experience or environment
- Can affect overall decision making
- Jennifer Lerner et al 2004
Emotions in Decision Making
- Subjects viewed sad, disgusting or neutral videos
- Determined price to buy and sell items
- Low sell price could be due to disgust and sadness causing a need for change
Context in Decision Making
- Shen et al 2010
- Tested Physicians about a test case for ceasarean
- Control test case presented first, Serious Previous Cases, Not Serious Previous Cases
- Test & Not Serious Cases perceived less serious than Serious Cases
Order Effects Parole
- Shai Danziger 2011
- Studied more than 1000 parole request rulings
- Favourable responses rose by 65% just after a meal break
- Dropped to Zero before taking a break
Order Effects
- Decisions can be impacted by preceding events
- Baseball umpires are more likely to call a border line pitch a strike if the preceding pitches were balls, and vice versa
- MacMahon & Starkes , 2008
Status Quo Bias
- People tend to do nothing when faced with a decision to make a change in their lives
- e.g. Switching Banks, Changing Electricity Company
- Johnson et al 1993
- Pennsylvania and New Jersey drivers defaulted to different insurance
- Most people stick with the default option
Opt-In vs Opt-Out
- People tend to do nothing when faced with the need to opt in
- Johnson & Goldstein 2003
- Australia, Germany, UK, Denmark have Opt-in Organ donation but low rates of donation.
- In Australia 69% believe organ donation is important
- France, Belgium, Singapore have Opt-out systems with 90% consent for organ donation
Tversky & Kahneman 1981
Framing Effect
Decisions are influenced by how a decision is stated
If framed in terms of gain people choose risk aversion strategy
If framed as losses the tendency is to risk taking stragety
Anchoring Bias
- Initial Information used to make judgements
- Once anchor is set we adjust away from the anchor
- Bias toward favouring the bias will occur
Anchoring Bias
Tversky & Kanheman 1974
Initial pieces of information use to make subsequent judgments
e.g. African Countries and the Rigged spinning wheel
What is a decision?
Making Choices between alternatives
Behaviorist view of decision making
A choice between two alternatives
Based on Relative reinforcement value of the alternatives
Quality Outcomes
Quality of a decision is overwhelmingly measured by the outcome
Expected Utility Theory
People are rational if they have all relevant information
This should tend to result in choices in the maximum utility
Prospect Theory
Individuals identify a reference point that represents their state of mind
The tend to exhibit loss aversion
What plays a role in decision making?
Emotions, Context and Biases
Dual Systems Approach
There are two mental systems we rely on for thinking
System 1 - fast, intuitive, automatic, not conscious
System 2 - Slower, deliberate, conscious and controlled
Concsious and Unconscious Decisions
- How well do we know ourselves
- Are we in control of our minds when it comes to decisions
- Can we perceive when we use system 1 or system 2
Osman, M. An evaluation of dual process theories of reasoning. Psychonomic Bulletin & Review 11, 988 1010 (2004). https://doi.org/10.3758/BF03196730 link
The Introspection Illusion
- Nisbett & Wilson 1977
- Cognitive Bias where people they have insight to their own minds but think other are unreliable
- People misreport causal influences on their behaviour
- Rarely better at explaining their own behaviour than other people can
- Newell & Sharks 2014
- But given time to reflect they can articulate their decisions process
- Shows these processes are not hidden or unconscious
Impulsiveness & Decision Making
- Ability to inhibit our behaviour responses is important
- Gives us the ability to evaluate consequences and choose more appropriate actions
Motor Impulsivity
- An impairment in withholding and cancelling inappropriate responses
- Related to Compulsive Gambling and inhibiting the urge to gamble.
- Chowdhury et al. 2017
Delay Discounting
- Humans and Animals choose smaller immediate reward over larger delayed rewards
- Related to cognitive impulsivity
- How long people will wait for larger reward
- Pathological gamblers show more impulsivity
- Alessi & Petry 2003
Training to Reduce Impulsivity
- Training in the Stop-Signal Task improves performance
- Increases Intracortical Inhibition to Motor Cortex
- Demonstrates neuroplasticity in the primary cortex
Working Memory Training
- Decreases impulsivity in delay discounting tasks among stimulant addicts
- Warren et al 2011
Go/NoGo Task
- Significantly better in experienced basketball players
- Non athletes much less so
- Less variable reaction time that baseball players
- Makamoto & Shiro 2008
The Perruchet Effect
When unconscious behaviour and conscious decisions disagree
Each toss has 50% chance of landing heads
Gamblers Fallacy
After the same outcome a few times it will be more likely in the future
The Conditioned Perruchet Effect
Speed/Accuracy Trade Off
- The choices we make (accuracy) and how fast we make them (response times) can serve as a window into the mind.
Introspection Illusion
- A cognitive bias in which people wrongly think they have direct insight into their mental state
- Treat other’s introspections as unreliable
- Given time to reflect we can express our decision making accurately
Impulsiveness/Cognitive Fallacies
Unconscious processes can influence our decision making
Training Unconscious Processes
- Training and time can weaken and overcome unconscious processes
- There is a Speed/Accuracy trade off in decision making
Expected Utility Theory:
- People generally are rational
- If they have all relevant information their choices result in the
maximum expected utility.
Utility
- Outcomes that are desirable
- Are in the person’s best interest
- People use their knowledge of probability to make decisions in their best interest
The Ellsberg Paradox
- Paradox of choice in which people’s decisions produce inconsistencies with subjective expected utility theory.
- Contradictory Thinking in decision making
Ambiguity Aversion
Also known as uncertainty aversion
A preference for known risks over unknown risks.
Prospect Theory
- Tversky & Kahneman
- People did not choose the equivalent options in the same way.
- How a question is framed influences how people choose
- People choose certain gain over certain loss
- People take risk of a loss over a risk of gain
Loss Aversion
- Individuals identify a reference point generally representing their
current state - Individuals are much more sensitive to potential losses than to
potential gains
Preference Reversal Effect
- Changes in perspective can completely reverse our preferences
- Bias towards certainty of favourable outcome
- Biased against certainty of negative outcome
The Monty Hall Problem
- 2/3 probability of winning the car if you choose to switch
- Initial probability of guessed right on your first choice was 33%.
- Instead of 3 doors, pick 1 door/100 doors, only one contain car.
- Probability of picking the correct door is 1/100 compared to 99/100 of you picking the incorrect door.
Endowment Effect
People tend to overvalue the winning probability of a current choice
Status Quo Bias
People prefer to stick with the choice they made
Errors of Omission vs Errors of Commission Effect
People prefer to make errors through inaction
Prefer to avoid errors through action
Behaviourist Talk about Decision Making
They mean Choice Behaviour
Prospect Theory
- People choose expected certain gain over probability of loss even when it is the lesser value option
- People choose Prospect Theory than Expected Utility Theory
