Reasoning and Decision Making

1. Reasoning and Decision Making Lindsey Lee, Mallory Moore, Brittany Ledford, and Alex Arthur

2. Reasoning • Involves drawing inferences or conclusions from given information premises.

3. Types of reasoning • Inductive: • Goes from a specific premise to a general conclusion. • Deductive: • Goes from a general premise to a specific/particular conclusion.

4. Deductive Reasoning • Two types of deductive reasoning: • Propositional reasoning • Uses if-then statements that are true to form a true conclusion. The conclusion can be either valid or invalid, even though the premises are true. • Syllogistical reasoning • Consists of two premises that are assumed true that lead to a conclusion. • Syllogism refers to quantities such as all, some, none, etc.

5. Examples • In mathematics, If A = B and B = C, then A = C. • Premise: All apples are fruits. • Premise: A Granny Smith is an apple. • Conclusion: Therefore, a Granny Smith is a fruit.

6. Deductive Validity • Arguments are only valid if and only if it is impossible for the premises to be true and the conclusion to be false.

7. Inductive reasoning • Two types of inductive reasoning: • Analogical reasoning • Uses information from known and familiar problems to solve current problem. • Hypothesis testing • Tests a number of possible solutions to a problem and modifying them based on feedback.

8. Example • (Google Images)

9. Inductive strength • An argument has inductive strength if it is improbable but not impossible for the premises to be true and the conclusion to be false.

10. video with Both https://www.youtube.com/watch?v=9b3KM2p1nHs

11. Subject to a variety of biases (conformation bias) Everyday reasoning

12. Decision Making • The mental activities that take place in choosing among alternatives. • With decision making comes a degree of uncertainty. Typically with decisions we are not 100% sure that they will turn out how we would like them to. • For example: When a basketball player is playing offense and has the ball, there are 3 options- pass to a teammate, dribble the ball, or shoot from the current position. In each of there options, there are varying degrees of success based on the situation. Typically the player will choose whichever option they feel least uncertain about. So if they decide to shoot, it is probably because other teammates are being tightly covered or the lane is not open to dribble into. Shooting the ball was the decision they made because they felt the more certain about its success than the other options.

13. Uncertainty • Most people are aware that there is a lot of information relevant to the decision, but do not know how to collect, organize, and use it all in the time allotted for the decision. • They know there are no guarantees, but do not want to make a bad choice. • Example: You are driving a car and see a deer run out in front of you. There is a very tiny window of time to make a decision on how to react. The high degree of uncertainty to this sudden situation in which you have to make a decision often causes people to make the wrong decision of swerving hard to avoid it and running off the road or causing a wreck with another vehicle.

14. rational decision making • Even when decisions are made carefully and are well thought through, sometimes the desired results do not occur. • Psychologists argue that the “goodness” of a decision can’t be measured by the success of the individual outcome and that rationality of the decision has to be considered. • Rational decision making involves considering all of your relevant goals and principles, not just the first thing that comes to mind.

15. Cognitive overload • When the information available overwhelms the cognitive processing available, cognitive overload has occurred. • This can lead to error and irrationality. • https://www.youtube.com/watch?v=Rc705-WS2l4

16. wo uib mes Lus A

17. Now write the letters down as they appeared!

18. woU ibM esL usA

19. Now write the letters down as they appeared!

20. Which one was easier?

21. The second one is typically easier. • Even though they are made up of the same letters, chunking it into groups of 3 makes more sense in our minds and is easier to remember. The cognitive load becomes lighter when we can chunk information into memorizable pieces.

22. Cognitive illusions in decision making • This chapter talks about the following illusions: • Availability Heuristic • Representativeness • Gambler’s Fallacy • Framing Effect • Sunk Cost Effects • Illusionary Correlation • Hindsight Bias • Confirmation Bias • Overconfidence • Cognitive Illusions: • Our book describes it as “the systematic biases and errors in human decision making”.

23. Availability Heuristic • Using information that pops into out mind more readily as a rule of thumb for similar occurences. • Ex.- Are there more words that begin with the letter L, or more that have L as the third letter? • “Well the first examples I can think of that stand out all start with L, so surely L being the first letter of a word is more frequent than being the third letter.”

24. Representativeness • People expect results to be representative of the process that produces them (even though the results may prove to have had the same probability of happening for some other trial). • Ex.- Which is more statistically probable? • Person A’s coin flip results - H H H T T T • Person B’s coin flip results - T T H T H H • The sequence of coin flips should be more random than Person A’s flips! The more random looking sequence must be more statistically probable.”

25. Gambler’s Fallacy and Framing Effect • Gambler’s Fallacy • Going from expecting outcomes to be statistically probable to reconsidering and expecting a new probability based on the outcomes you had just witnesses (since they didn’t appear to follow what was statistically probable). • They are using the Law of Small Numbers and assuming that this tiny sample they have observed provides the true probability for outcomes. Framing Effect • Depending on how things are phrased, we may come to think a certain outcome is more positive or optimistic than another even though the two statements are proposing the same thing. • http://www.inc.com/daniel-kahneman/idea-lab-daniel-kahneman-framing.html • (0:41-1:13)

26. Sunk cost effects and illusionary correlations Illusionary Correlations • Seeing nonexistent correlations that probably don’t really exist. • http://www.google.com/trends/correlate is a fun way to make up some of these. • i.e. the search activity “Doritos” resembles that for “who invented traffic lights” by 87.3%! • An illusionary correlation that may follow from this is “people who eat Doritos must be curious people!” However, just because their search trends are almost identical doesn’t mean one depends on another. • Sunk Cost Effects • Not allowing a project to be abandoned after sufficient effort and time has been put into it, even though you now know it’s not likely to be worth it in the end.

27. Hindsight bias • For example, say you and your friend are both watching Disney’s “Frozen” for the first time. You get to the point in the movie where it is revealed that the character Hans, was actually after the crown of Arendelle (and not true love). • You friend exclaims, “Ha! I knew that guy was bad from the beginning!” Even though there had been hardly any hints up until recently that this was so. • The “I knew it all along” bias.

28. Confirmation Bias and Overconfidence • Confirmation Bias • Tendency to seek out someone who will confirm your beliefs and to ignore information saying otherwise. Overconfidence • A bias in which people see their own knowledge to be more accurate than it actually is. • It may be me being overconfident, but I believe we have talked or read about both of these biases before.

29. Expected Value • Most times, decisions are a gamble and we do our best to win more than we lose. We use probability theory to help us figure out the likeliness of us winning. • In finance, we use tools like expected value to help us decide which out of two choices would have the highest probability of producing bountiful results.

30. How expected value is used • Expected value helps to provide a guide to how much money you should be willing to spend on a gamble (like a lottery ticket). • So you shouldn’t spend more on a lottery ticket than the expected value of the lottery in return.

31. Expected Utility Theory • We often care about other aspects of possible outcomes: our chances for happiness, success, or fulfillment of goals. • Psychologists use the term Utility which means to capture ideas of happiness, pleasure and the satisfaction that comes from achieving one or more personal goals. • A choice that fulfills one goal has less utility than a choice that fulfills that same goal plus another. • Because we also care about how likely we are to be happy an accomplish our goals, we use utility to capture these ideas. • Expected Utility Theory is a normative model of decision making.

32. Multiattribute Theory • The Multiattribute Utility Theory is a model that is designed to integrate different dimensions and goals of complex decision making. • For when you have many goals and find it hard to figure out how they all fit together. • Helps when a person has problems in integrating how the various factors and goals will influence decision making.

33. The multiple steps in naut • Break the decision into different dimensions • Determing how important each dimension is • List any other alternatives • Rank the alternatives combined with the different dimensions • Multiplying the ranking by the weighting of each alternative to determine its final value • Choosing the alternative with the highest value

34. Descriptive Models of decision making • Image Theory- fundamental assumption of Image Theory is that in making real-life decisions, people rarely go through a formal structuring process in which they lay out all their options and criteria and then with and integrate various pieces of information. • Prochoice Screening of Options- narrow choices to a small amount and decide from what is left. • From there, choices are determined based on Trajectory Image, Value Image, and Strategic Image. • How compatible is the choice with your values? How will you make it happen? What are your goals for the future?

35. Neuropsychological Evidence on reasoning and decision making • Which parts of the brain are responsible for higher-order cognitive process? • No one part of the brain is responsible for a higher function. This makes it harder to accurately say where memory, knowledge, perception, and language take place at or in which regions of the brain are responsible for these complex operations.

36. Neuropsychological Evidence on reasoning and decision making • Today’s research shows- • Focused on prefrontal cortex as the main cog to these cognitive processes. • Waltz and Colleagues (1999) found that patients with prefrontal cortex damage had trouble reasoning problems with multiple propositions without showing severe deficits in IQ. • Reinforced by the Neuroscientist Antonio Damasio (1994) argument over the case of Phineas Gage.