1 / 32

Allison Spielman Advisors

Allison Spielman Advisors. Cognitive Decision Making: How Your Brain Can Fool You January 29, 2013. Why Talk About Decision Making?. It is what we do It can help you improve your life. Quiz. In middle of page write down the last 3 digits of your phone number .

marion
Download Presentation

Allison Spielman Advisors

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Allison Spielman Advisors Cognitive Decision Making: How Your Brain Can Fool You January 29, 2013

  2. Why Talk About Decision Making? • It is what we do • It can help you improve your life

  3. Quiz • In middle of page write down the last 3 digits of your phone number. • Put a mark above or below if you think Attila-the-Hun died before or after the number you wrote. • Now write down the year that you think Attila-the Hun died. • Answer 453AD

  4. Anchoring • Richard Thaler • Daniel Kahneman & Amos Tversky

  5. Other Examples Mahatma Gandhi Proportion of African countries in the United Nations

  6. Implications Negotiations Driving Relationship Fund Raising

  7. Framing Classic Illustration: Rare Asian Disease

  8. Implications Lawyers influencing juries Labor negotiations Medical decision

  9. Representativeness Tversky & Kahneman – The Linda Problem

  10. Implications Jury decisions HIV testing

  11. Other Heuristics Availability Recency Confirmation Over-confidence Loss Aversion 200 more by some estimates

  12. Popular Press “Sway: The Irresistible Pull of Irrational Behavior” by Brafman & Brafman (2008) “Blind Spots: Why Smart People Do Dumb Things” by Van Hecke (2007) “Predictably Irrational: The Hidden Forces That Shape Our Decisions” by Ariely (2008) “Decision Traps: The Ten Barriers to Brilliant Decision Making” by Russo & Schoemaker “Everyday Irrationality: How Pseudo-Scientist, Lunatics, and the Rest of Us Systematically Fail to Think Rationally” by Dawes (2001)

  13. So…Are we hopelessly irrational decision makers?

  14. Gary Klein “What really happened is that Kahneman and Tversky designed their studies to demonstrate the limits of classical decision theory, not the limits of their subjects”

  15. Two System Brain

  16. System 1 Automatic Quick Little or no effort No sense of voluntary control Operates below our consciousness (mostly)

  17. System 2 Effortful Complex computations Choice Concentration Consciousness

  18. Two System Brain

  19. Synaptic Connections

  20. Dopamine Produces good feelings Expectations Amplified - Cortex

  21. Examples Iowa Gambling Task Lt Riley

  22. Implications Fire Fighters Code Blue Emergencies Driving

  23. Dopamine

  24. Examples Yale Undergrads vs. Lab Rats Apple iPods

  25. Implications Stock Investing Investment Bubbles

  26. Interaction Between System 1 and System 2

  27. Shopping Choices

  28. Making Shopping Decisions

  29. Applications – Cognitive Biases Control the data Know when you are susceptible

  30. Applications – System 1 or System 2 Less Important – System 2 More Important – System 1 Predictable Patterns – System 2 (maybe) Random Patterns – System 1 Puzzles vs. Mysteries

  31. Applications – Improving Decisions Embrace Uncertainty Focus on Errors THINK ABOUT THINKING

  32. Over-coming errors Start with realistic anchors – GIGO Build expertise Put Judgments into perspective Represent data in a more usable fashion

More Related