Decision Making and Reasoning

1. Decision Making and Reasoning • Models of Decision Making/Reasoning • Biases in decision making • Confirmation bias seen in ……. • The use of heuristics in decision making/ reasoning • A heuristic is a guiding ............ or .............. used in solving problems or making decisions.

2. Models of Decision Making • 2 different types of models for decision making • Prescriptive models • ………………….. • …………………… • …………………….. • Descriptive models • Models describing the way decisions are actually made • Cognitive psychologists are interested in how people …………………………………. High effort: multi-attribute decision-making Low effort: use of heuristics

3. A Prescriptive Model:Classical Decision Theory • Assumed decision makers • Knew all the options available • Understood pros and cons of each option • Rationally made their final choice • Goal was to maximize value of decision

4. A descriptive model:Satisficing • To obtain an outcome that is …………………… • Term introduced by Herbert A. Simon in his Models of Man 1957 • Simon noted that humans are rational but within limits (bounded rationality)

5. Effort and Decision Making • High effort: multi-attribute decision-making • Low effort: use of ..................... • Heuristics can be accurate in some situations. • But can also lead to ………….

6. Heuristics Influencing Decision Making/Reasoning • Representativeness • Availability • Illusory correlation • Confirmation Bias

7. Representativeness Heuristic • Judgments strategy in which we make estimates of how similar (or representative) an …………………………………………………. • An object is judged by similarity, i.e. the degree to which the object resembles a …………………………… • Coin toss: Which outcome is more representative (more likely)? • H H H H H H • H T H T H T

8. Representativeness Heuristic • Can be accurate • Can also ……………………… • Kahneman & Tversky (1972) • In general population birth rates are about 50% boys and 50% girls. • There is a big hospital in a city (45 births per day), and a small hospital in a town (15 births per day) • For a period of 1 year, both the larger hospital and the smaller hospital recorded the number of days on which > 60% of the boys born were boys. • Which hospital recorded more such days • Big hospital • Small hospital • About the same

9. Representativeness and the Gamblers Fallacy • Suppose you are at a roulette wheel and the last 8 spins have come up red. • Do you bet on red or on black for the next spin? • Red and black are ……………………… • No statistical reason to select ………………………….

10. Availability Heuristic • In the English language, are there more words beginning with the letter K or more words with K in the third position? • People often report 2 x as many words beginning with K • But there are …………………………………

11. Availability Heuristic • The ease of bringing an example to mind is a means of estimating ……………………………………… • An event is judged by accessibility, i.e. by the ease with which instances are ……………………………………. • Bias -- tendency to overestimate rare events

12. Availability Heuristic • Actual frequency influences how easily evidence comes to mind but so do other factors • …………………………. • …………………………… • - Media more likely to report sensational events such as hurricanes, terrorist acts, airplane crashes. • People are more likely to think they will die from rare causes (airplane crash) than common causes (automobile accident) • Famous vs. “not so famous” names study (Tversky). • Ps given names of 19 famous people and 20 not-so-famous people. • Later asked which type of name had occurred more frequently? • Most Ps said …………………………………..

13. Illusory Correlations • An illusory correlation is a perceived relationship that does not in fact ……………………………. • Illusory correlations are formed by the pairing of two distinctive events • Redelmeier and Tversky (1996) • 18 arthritis patients observed over 15 months • The weather was also recorded • Most of the patients were certain that their condition was correlated with the weather • The actual correlation was ………………………. • What illusory correlations may affect your decisions?

14. Confirmation Bias • Confirmation bias -- tendency to seek (and find) information that ………………………………………………………

15. Confirmation Bias and the Wason Selection Task • Which cards do you need to turn over to obtain conclusive evidence of the following rule: A card with a vowel on it will have an even number on the other sideE K 4 7

16. Logical Reasoning • A card with a vowel on it will have an even number on the other sideE K 4 7 • Answer: • E -- search for positive evidence • ……………………………………………………………… • 4% only search for positive & …………………………. • 33% say E only (missing ……………………………. • 46% say E & 4 • 4 is …………………………………

17. Wason Selection Task (continued) • People do better on this task if it is placed in an everyday ………………….. • Task: Pick cards that need to be looked at to prove: • If the person is drinking a beer then the person must be over 19 yrs. old • Drinking a beer 16 years old Drinking a coke 22 years old

18. Conclusion • Research has demonstrated a number of errors in reasoning/decision making based on the use of heuristics • Also logical errors as in the Wason selection task. • We may not be as rational as we like to think we are?

19. A cautionary note • While research shows that biases and errors are common in human decision making, some psychologists argue that this is due to the laboratory tasks used. • Evolutionary psychologists argue that traditional decision research has imposed an unrealistic standard in that questions are asked in ways that have nothing to do with the adaptive problems that humans have evolved to solve. • Consistent with this theory, many reasoning errors disappear when problems are presented in ways that resemble ....................................

20. Cautions (continued) • Gigerenzer (2000) argues that humans do not have the time, resources, or capacities to gather all information, consider all alternatives, calculate all probabilities and risks, and then make the statistically optimal decision. • Instead, we use the fast and frugal route, making quick, one-reason decisions which yield inferences that are often just as accurate as much more elaborate and time-consuming strategies.