Decision Making Final Exam
What is the human perception of randomness?
*People often underestimate how non-random a random sequence might appear in the near-term -Fail to behave like a coin -Gambler's Fallacy
What is the adaptive value of pleasure and pain?
*Pleasure = a "go" signal. Guides organisms to continue important activities (eg- sweet, energy-rich food) *Pain = a "stop" signal which interrupts activities that are causing harm (eg- standing on hurt foot)
What else does accuracy require of researchers?
*Proper tracking of changes in the mean over time eg: Freshman 15 can be attributed to change in average body weight instead of amount eaten
Briefly describe D. Gardener's book the Science of Fear
*Safer and healthier than ever but more afraid *Profits after made off of fear -just need people to believe that they are less healthy or safe then they actually are
List and define the different types of events in a problem space?
*Simple Events *Conjunction Events *Disjunction Events *Conditional Events
Describe Tversky and Kahneman's research regarding the Vividness Effect
*Some participants saw a house on fire *Other participants read a newspaper story about a fire *Estimated probability of such accidents *Results" Saw fire > Read about fire
What role does the media play in the use of Availability Heuristic?
*Unusual events get publicity, causing people to over-estimate their frequency *Non-occurrences go unreported, causing people to under-estimate their frequency
How can someone avoid a mood bias?
*Using a statistical model *Avoid emotionally charged stimuli
Describe Gigerenzer's research (2006) on Availability Heuristic
*in the year following 9/11 terrorist attack, vast numbers of people switched from flying to driving *Driving Risk > Flying Risk *People changed to driving which increased the amount of cars on the street which also increased accidents
What does a coherent narrative lead to?
*inaccurate probability estimates *Produces Hindsight Bias -Memory reconstruction processes are partially constrained by these narratives (often, it is the story that creates the memory rather than vice versa)
Choice Aversion
-loss aversion -Peoples tendncy to prefer avoiding losses to acquire equivalent gains
Translate components to probability theory notation, assuming a set of 1,000 "typical" women over 40 Risk = 1% = 10 in 1,000 p(positive test|no cancer) = 10%
1,000 women - 10 cancers = 990 X 10% = 99 no cancer women who test positive and 990 X 90% = 891 no cancer women who test negative *p(positive test | cancer) = 80% *10 X 80% = 8 cancer women test positive and 2 cancer women test negative *C = cancer PT = positive test Think of C as a "hypothesis" and PT as "data" 99+8=107 of 1000 1000 X p(PT) = 107 p(PT) = 107/1000 = .107 No+ = 99 Yes+ = 8 No- = 891 Yes+ = 2
How are Disjunction Event calculated?
A = female B = physical science C = male physical science D = both P(A or B or D) A = 2,513 C = 815 - 211 = 604 (avoid double-counting) so: A + C = 3,117 P = 3,117/5,026 = 62.02% p(A or B) = p(A)+p(B)
How are Conditional Events calculated?
A = female B = physical science = 815 C = total female physical science = 211 p(female | physical science) 815 * X = 211 p = 211/815 = 25.89%
Hot-Cold Empathy Gap
A bias in which people underestimate the influence of their current internal state on their attitudes, preferences, and behaviors
What sample size is more likely to be representative of the population statistics?
A large number is more likely to be "representative" of the population statistics than a small sample
What is Early Prospect Theory? What theory does it replace?
A model that demonstrates the way that people decide between alternatives that involve risk and uncertainty Decision-making depends on choosing among options that may themselves rest on biased judgments; predicts why gains are treated differently from losses -made use of the law of diminishing returns -A descriptive theory that emphasizes movable reference points Replaced the Utility Model
What is the issue(s) with using the Representativeness Heuristic
Base-rate information is usually ignored
What could the first 7 chapters of the book be interpreted as? What does Chapter 8 convey?
Ch 1-7 -a catalog of cognitive habits of thought that deviate, sometimes radically, from the laws of probability theory Ch 8 -Essence of elementary probabilistic thinking with examples
Give an example of Inverse Probabilities
Ch 8
What are we sensitive to in circumstances? Does this make us more accurate?
Changes in circumstances -overestimate impact
General model of the belief sampling process for the construction of evaluations and attitude for complex multifaceted objects, individuals, and attitudes
Chapter 9 page 214 Comprehension -> Retrieval -> Judgment -> Response
Descriptive Theory
Characterizing and explaining regularities in choices that people are disposed to make -What we ACTUALLY do -Prospect Theory
Texas Sharpshooter Fallacy
Cherry-picking data clusters to suit an argument, or finding a pattern to fit a presumption.
What does our utility estimate represent?
Choices between memories of experiences
Conjunction Event
Combination of two Simple Events eg: Linda eg: getting a hard 10 p(hard way 10) = 1/36 = 1/36 = 2.78% eg: getting an easy 10 p(easy way 10) = 1/18 = 5.56%
What is the Combinatorial Computation? How is it computed?
Computes the number of ways "K" can be selected from N given the inputs n!/(k!(n-k)!) *n = number of items in the set K = number of items selected from the set
Normative Theory
Concerned with identifying the best decision to make -How we SHOULD choose something -Classic Utility
Describe Conway and Ross's (1984) experiment and its findings
Conducted a fake study skills course for about 4 weeks -1 month: participants reported previous study skills as worse than they had originally reported -6 months: participants overestimated their academic performance for the term during which the program was conducted
Simple Event
Simplest Event- An event consisting of only one outcome eg: one die getting 1 P = 1/6 = 16.67%
Describe Dutton and Aron's study (1974) and Durante et al.'s (2012) research regarding the effects of the current state
Suspension bridge study (Dutton & Aron, 1974): -Men on fear arousing bridge -Men next to bridge -Female interviewer approached both. More men on the bridge attributed their fear-arousal as attraction and were more likely to call the women back for results (supposedly due to attraction toward the interviewer Women (Durante et al., 2012) -Sexy cads were chosen more frequently than reliable nice guy during their ovulation cycle (shifts their perception to see the sexy cads as the better mate)
What does the text mean by the "Essence"? (ie- what is the possible first rule of probabilistic analysis?)
Take a birds-eye, distributional view of the situation and define a sample space of all possible events and logical set membership interrelations
Respond to the idea of valuing formal principles of rationality... but not taking them too seriously
Taking the formal principles of rationality too seriously can create extreme distress and in itself would be irrational. Because of carry-over feelings emotions and experienced utility matter when regarding a decision -needs to be a balance between experienced utility and formal principles
Hedonic Relativism
Tendency to have a (somewhat) stable baseline of happiness
What did Kahneman, Wakker, and Sarin's (1997) research focus on?
The Adaptive value of pleasure and pain
Immune Neglect
The human tendency to underestimate the speed and the strength of the "psychological immune system," which enables emotional recovery and resilience after bad things happen.
Problem Space
The set of possible pathways to a solution considered by the problem solver.
Reference-Dependence
The tendency to evaluate gains and losses relative to a reference point, rather than in an absolute sense -View loss as much worse than the pleasure of an objectively equal gain
Base-Rate Neglect
The tendency to ignore information about general principles in favor of very specific but vivid information.
Disjunction Probability Fallacy
The tendency to judge/estimate a disjunctive statement to be less probable than at least one of its component statements
What is the tendency of people's decisions (ie-people's decision show too much of what?)
Too focused on whether the description is representative of a category's members, we often ignore useful base rate information -We commit base-rate neglect
Being uplinked to culture gives us a vastly enlarged awareness through deep enculturation which allows for what?
Trans-generational solutions -don't have to start over from zero every generation
Conditional Events
Two events are conditional if the probability of one event changes depending on the outcome of another event. eg: Throw a 1 | total of 7 p = 2/6 = 33.33%
What are the core ideas of Kahneman's (2003) research?
Two-system structure -system 1 has a large role -extreme, context dependent -act intuitively (based on what they happen to see)
Are errors predictable?
Under certain conditions
Do people tend to over- or underestimate the probability of disjunctions of events? Why?
Underestimate Reasons: *judgments tend to be made on the basis of the probabilities of individual components -Even if p(simple event) is low, p(disjunction) could be quite high *Factors leading to underestimation of the p(simple event) within a "set" can also lead to underestimation of the p(disjunction)
What are the steps of the Bayes' Theorem?
Used to update probability estimate in light of relevant evidence *Create a table of empirical frequencies -translate components to probability theory notation
List some solutions to visualization technology's events on Hindsight Bias
Using multiple perspectives and simulated experiments -keeps from forcing a single perspective and reduce misattrobution of individual perspectives
Tower of Hanoi
a problem in which you transfer a series of different-sized disks from one spindle to another following a specific set of rules
Gambler's Fallacy
belief that a small sample of a random sequence will "correct itself" to match the full set's overall probabilities
Durability Bias
belief that both our good and bad moods will last longer than they do
What is the problem with standard rational models of decision making in economics?
It can be psychologically unrealistic -long-term isn't where we live
What is the danger of compelling narratives?
It's hard to resist a "good story" -"People too readily trust their own created stories of the future, which unduly draw from details of the present" (Gilbert, 2006)
How do we deal with uncertainty?
Constructiveness and rational assessment
How might a narrative influence one's growth mindset?
Growth mindset -a good story could set a bias to be a certain way/choose a certain way which limits perspective of being able to grow
What is Non-Compensatory
Deal-breaker *weed out the weak
Law of Large Numbers
Describes how the average of a randomly selected large sample from a population is likely to be close to an average of the whole population
Give examples of violations of invariance
Descriptive Invariance Violation -select 1 prize 36%-> elegant pen 64%-> $6 or 46%-> elegant cross pen 52%-> $6 2% inferior pin Procedural Invariance Violation -V1 *Program A-> $550m and 500 deaths Program B-> $12m and 570 deaths -V2 Program B-> $12m and 570 deaths _______ and 500 deaths (would not go as far as they would in V1)
What is both perception and intuitive evaluations of outcomes dependent upon?
Reference-dependent
Buyer's Remorse
Regretting a purchase soon after making it.
What is the meaning of Hedonic?
Relating to/considered in terms of pleasant (or unpleasant) sensation -measure of emotion
How is representative thinking related to the Ratio Rule?
Representative thinking fails to reflect the asymmetry of the Ratio Rule
What Heuristics make decision-makers more susceptible to disjunction probability fallacy?
Representativeness heuristics
Contrast the effects of disgust vs sadness on people's "choice prices"
Sadness = spend more Disgust = spend less
Compare Satisficing and Maximizing
Satisficing -Fast -Less likely to achieve optimality -Avoids ego depletion and decision fatigue Maximizing -Slow -Optimal -Exhaustive and Exhausting
Problem Frame
description changes decision -incorporates a cognitive perspective on how people respond to information -importance of structure and of having ways to organize that information eg: you receive $200 -you receive $100 more* or -you flip a coin and either get $200 more or nothing vs you receive $400 -you give back $100 or -you flip a coin and either keep everything or give back $200*
Decision Fatigue
deteriorating quality of decisions made by an individual, after a long session of decision making
Joint Evaluation
evaluate options simultaneously
Null Event
event with no outcomes that satisfy it
Give an example of perception and decision making
height of A = immediately accessible area of B = immediately accessible -flipped = effortful and deliberate
Availability Heuristic
judging a situation based on examples of similar situations that come to mind initially
Representativeness Heuristic
judging the likelihood of things in terms of how well they seem to represent, or match, particular prototypes; may lead us to ignore other relevant information
What is a Naturalistic Setting? What is the drawback? What can be used to combat this drawback?
observing/recording some behaviors/phenomenon in a natural setting without interfering Drawbacks -Don't offer certainty of "logical frequencies" Fix -Use "empirical frequencies" eg: Random selection of a Total # of ____
Two cab companies operate in River City, the Blue and the Green, named according to the colors of the cabs they run. In total, 85% of the cabs are Blue and 15% are Green. A cab was involved in a hit-and-run accident in the night. An eyewitness later identified the cab as Green. The court tested the witness's ability to distinguish between Blue and Green cabs under nighttime visibility conditions. It found the witness was able to identify each color correctly about 80% of the time, but he confused it with the other color about 20% of the time. What do you think is the probability that the cab in the accident was Green, as the witness claimed?
p(G) = 15% so 1,000 cabs X 15% = 150 Green 150 X 80% correct IDs = 120G Correctly claimed G and 30 G erroneously claimed Blue p(B) = 85% so 1,000 cabs X 85% = 850 Blue cabs which means 850 X 80% correct IDs = 680 B correctly claimed B and 170 B erroneously claimed G p(claiming G | G) = 80% 120Correct + 170false alarms = 290 of 1,000 so = .29
Ratio Rule
p(S|c) = the inverse of p(c|S) The ratio of inverse probabilities equals the ratio of simple probabilities P(A|B) / P(B|A) = P(A) / P(B) -Representative thinking fails to reflect asymmetry present in the use of the ratio rule
What are Inverse Conditional Probabilities and how are they calculated? Are they the same as Conditional Events?
p(female | physical science) --> p(physical science | female) 211/815 -> 211/2,513 = 8.4 *Not the same as the opposite conditional probabilities
Diversification Bias
people underestimate how similar their desires will be on different occasions
Illusion of Control
people's belief that they can influence events, even when they have no control over what will happen
What is the Signal Detection Theory?
predicts how and when a person will detect the presence of a given sensory stimulus amidst all of the other sensory stimuli in the background
ROC curve How is it created?
receiver operating characteristic curve compares false alarm rate on x axis to hit rate on y axis steeper curve means more accurate -Can be created by analyzing the relationship between judgments of learning and retrieval performance
Opportunity Cost
the loss of potential gain from other alternatives when one alternative is chosen.
What problems do decision-makers face with a technologically advancing society?
the more automatic part of our information-processing minds may be ill-prepared for a high-tech society -System 1 draws quick conclusions on the basis of exposure to events -High-tech society = information transmission at great distance
Diminishing Returns
the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
Sample Space
the set of all possible outcomes of an experiment
Vividness Effect
the tendency for dramatic, shocking events to distort one's perception of reality
Regression Toward the Mean
the tendency for extreme or unusual scores to fall back (regress) toward their average.
Counterfactual Thinking
the tendency to imagine alternative events or outcomes that might have occurred but did not -reduces hindsight bias and egocentrism
Mood Congruence
the tendency to recall experiences that are consistent with one's current good or bad mood
Superadditivity
the whole is more than the sum of its parts *Support for each proposition is difficult to retrieve (retrieval disfluency) *components are judged (too) unlikely, which means probabilities end up summing to < 1.0
Target attribute
what you are trying to reason about. key information of importance
Endowment Effect
when ownership increases the value of an item
Probability Neglect
worrying about remote possibilities while ignoring higher probabilities
Graph the interactions of perception and decision making
ch 10 -perception follows the same process and content as intuition (system 1 processing)
Response Criterion
criterion one sets for calling an item "old"
What advice do Hastie and Dawes (2010) give to better judgment? Give some examples
"Create an effective external (diagrammatic and symbolic) representation of the situation being judged"
Today, we are safer and healthier than ever before, but we are more afraid. Why? What is media's role?
"Few opportunities to make money from convincing people they are, in fact, safer and healthier than ever- but there are huge profits to be made by promoting fear" -money off fear
What is time's role in our effort to maximize pleasure while minimizing pain?
"Good things satiate and bad things escalate" (Coombs & Avrunin, 1977)
Hindsight Bias
"I knew it all along"
What is the heart of the Gambler's Fallacy?
"Misconception of the fairness of the laws of chance" -"Fairness of the coin"
What is the central thesis to the book?
"Our intuitive, automatic thinking processes can lead us to choose one alternative while analytic controlled thought leads us to choose another"
What does collected data about heuristics tell researchers?
*People are often inaccurate in predicting probabilities/statistical frequencies -ie: How likely is it that something is true or is going to happen?
What is the "R Problem"?
*People generate an estimate by searching through memory for relevant words *It's much easier to retrieve words by their first letter than by their third letter -One "search set" is more effective than the other *People mistakenly estimate words that start with r as more numerous
How is P found?
(Number of Outcomes) / (Number of Possible Outcomes)
How is Signal Detection Theory usually tested?
(usually) by presenting participants with an item and eliciting a yes/no decision
What safeguards do scientists use when using probability estimates?
* Large enough sample size *A priori theorizing (be cautious of post hoc analysis) *Avoiding "cherry picking" (identify all outcome variables) *Replication (don't get tricked by a bizarre coincidence)
Where do many errors of judgment and reasoning about uncertainty occur?
*"Mistakes that are made at the very beginning of the process, when comprehending the to-be-judged situation"
In Tversky's book Judgment Under Uncertainty: Heuristics and Biases, what was proposed?
*A small number of heuristic guide human decision making *The same strategies that normally guide us toward the correct decision may sometimes lead us astray
Aside from emotions, what are the other important concepts of inner drives?
*Affective Forecasting *Durability Bias
Summarize one example of how appraisal tendencies influence the content of thought
*Appraisal tendencies are tailored to help respond to emotion provoking event and persists beyond eliciting situation and affect content and depth of thought -Fear = risk averse -Anger = risk seeking
What are some examples of events that increase a person's Illusion of Control?
*Belief that an opponent is incompetent -eg: dapper vs schnook *Attribute more importance to things they choose -eg: Pick card vs given * Attribute more importance to familiar things -eg: Lotteries with letters vs symbols
According to Kahneman (2011), stereotyping can be occasionally be helpful, however, it usually is not. Why?
*Can improve accuracy of judgments -Strong social norm against stereotyping *Social norm helps create a more equal and civilized society -Neglecting valid stereotypes will also lead to "sub-optimal judgments"
Describe Langer's (1975) ideas on Prediction
*Competent vs incompetent opponent *Choice vs no choice situation *Familiarity vs unfamiliarity
List and describe the different violations of invariance
*Descriptive Invariance How something is described influences the choice made *Procedural Invariance How a choice is measured influences choice
To properly analyze performance, what must be measured?
*Discriminability *Response Criterion
What influences the use of the Availability Heuristic?
*Ease of retrieval *Vivid cases
How can decision-makers protect against subadditivity? What is the fault with this protection method?
*External aids (eg- diagrams) protect against subadditivity -people show subadditivity when their estimated probabilities of sub-events sum to > 1.0 which could be avoided using formula-driven spreadsheets Problem: -all possible events must be included, otherwise, listed probabilities will be inflated
How are external cues related to external aids? Give examples
*Facilitate correct thinking about inverse probabilities -Identify "asymmetric verbal links" eg: some roses are red does not mean that all red flowers are roses
How is Hindsight Bias maladaptive. How is it good?
*Flawed assessment of the past (decision trap) *Can make perspectives unclear and muddle judgment *BUT! It can be used to better predict and prevent future failures
Why are alternative methods to narratives effective? What problems do alternatives face?
*Gain (when possible) accurate causal knowledge about the system in question *The challenge -we often have only skeletal knowledge about causal mechanisms
Example of Reference Dependence (Kahneman, Knetsch, and Thaler, 1990)
*Gave 1/2 participants a mug (Sellers) *let 1/2 participants choose either a mug or money (choosers) Participants choose how to estimate market value: Sellers- $7.12 Choosers- $3.12
What is the biological background of the illusion of control?
*Increased activity of the Medial Prefrontal Cortex *Causal agents = allows opportunity to optimize rewards and minimize punishment
List the types of Experienced Utility
*Instant Utility *Remembered Utility
Problems with affective forecasting
*Leave out details (can't imagine every feature and consequence) *Fill in gaps in the picture of the future with details borrowed from the present *Fail to recognize that things will look different once they happen (eg- Underestimate the "psychological immune system's" ability)
List the choice strategies (8)
*Lexicographic *Dominance *Additive Linear *Additive Difference *Satisficing (Conjunctive) *Disjunctive *Elimination by Aspect *Recognition Heuristic
What challenges do decision-makers face when making a decision?
*Limited cognitive resources *Time constraints when collecting information relevant to decision making *Need to take action, not withstanding our lack of access to all the potentially important detail
Where do errors generally occur?
*Past (remembering self) *Future (planning self)
List and define the two features of Remembered Utility
*Peak-End Evaluation -an experience is evaluated and remembered based on the peak (most intense) point of the experience and/or ending of the experience *Duration Neglect -observation that people's judgments of the unpleasantness of painful experiences depend very little on the duration of those experiences
Describe the Illusion of Control
-Adaptive because it provides a protective factor against maladaptive behaviors -Without-> may develop into disorders -Sense of security
Why is choice problematic?
-Anticipated regret -Buyer's remorse/Opportunity cost -Direct aversion to too large of a choice set
What is the source of the Hindsight Bias according to Roese and Vohs (2012)?
-Cognitive inputs (recalling information consistent with what they know now) -Metacognitive inputs (ease of understand past outcomes) -Motivational inputs (need to see world as orderly and predictable)
How are optimal cutoff points determined effectively?
-Find a large sample population -Calculate probability that a positive diagnostic at/above a given score would be accurate -Construct ROC curve for false vs true positives -Select threshold of acceptable balance
Describe and explain Tversky and Kahneman's research on ease of retrieval
-Groups of participants, each shown a different list of well-known personalities *one list = relatively more famous men *Another list = relatively more famous women -Participants asked to judge whether the list contained more male or female names -Results: Participants' judgments were biased by the ease of retrievability of instances
Describe Choice
-Involve complex and salient decisions and basic perceptual decisions -Choices express preferences, assert the self, and exercise control over the environment (need to exercise autonomy)
The Linda Problem
-Linda is 31 years old, single, outspoken, and very bright. As a student, she was deeply concerned with issues of discrimination and social justice and also participated in antinuclear demonstrations. -Rank the following options in terms of the probability of their describing Linda (1=most likely, 9=least likely)? A teacher at an elementary school Works in a bookstore and takes yoga classes A bank teller Active in the feminist movement A psychiatric social worker A member of the League of Women Voters A librarian going to law school at night An insurance salesperson A bank teller active in the feminist movement
Planning Fallacy
-Tendency to forecast a best-case scenario rather than consult the statistics of similar cases -The tendency for people to be unrealistically optimistic about how quickly they can complete a project
What is memory sampling and how does it affect perception?
-Using what you can remember of something to make a decision/judgment -Currently accessible memories influence value estimates
From the standpoint of "Substantive Rationality": *Identify factors in deciding when subjective experience should matter vs when leak plugging is judicious *Discuss "decision-specific myopia"
1. Cost of the outcome -subjectiveness should matter when relevant in a rational way -leave plug when subjective experience is distressing 2. Decision-Specific Myopia -Actively ignore long-term effects of a decision in favor of current habits/ideas/perspective -Encourages use of punishment
What are the basic themes/findings of each research article?
1. Mood Effects on Subjective Assessment -Induced moods in participants in participants and asked them to estimate probabilities of positive and negative events -Happy people were optimistic sad people were pessimistic 2. Diagnosis of Mental Disorders -Automatic causal reasoning (causal assumption of clinicians affect diagnostic judgments) -Presented some symptoms and asked how likely another symptom was the occur (experienced clinicians are especially vulnerable to influences of causal knowledge- Type 1 Processes) 3. Hindsight Bias -Derives from cognitive, metacognitive, and motivational inputs -Consequences of HB-> Myopia and overconfidence -Reducing HB: Raise awareness to possible alternatives 4. Born to choose -Desire to exercise control (and make choices) is paramount for survival -Enhances perception of control -Biological need. Environmental and cognitive resources and value 5. Better Decision Through Science -Statistical prediction rules often raise accuracy -Hasten speed or recognizing key diagnostic features -Formulas are great -Met with resistance 6. "Leaky" Rationality -Only a narrow set of cases where formula principles apply in their strictest form (too much psychologically going on that it leaks through) 7. Feelings and Consumer Decision Making -ATF: Appraisal Tendency Framework -Emotions and carryover may be more important to consider than just valence (need a balance between experienced utility and valence)
List and define the 3 Evaluation Heuristics
1. Predictions of value based on remembered past experience (remembered utility) 2. Predictions based on simulating what the future experience might be like (decision utility) 3. Predictions based on deliberate calculations or inferential rules (likelihood of which is affected by many factors-> eg: frames)
Time and Variety
2 ways to avoid habituation -if you have one, you don't need the other (Gilbert, 2006)
Why should we be cautious when using probability estimates?
A specific data set (especially small ones) may not reflect the "big picture"
Outcome(s)
A specific results of an experiment
Multi-Attribute Utility Theory (MAUT)
A structured methodology designed to handle the trade-offs among multiple objectives -Trying to balance consideration of attributes
Bayes' Theorem
A theorem that enables the use of sample information to revise prior probabilities. *Posterior Probability *Conditional Probability
Folk Theory
A theory we develop through our own observations, experiences, and knowledge. It exists in our heads, and we may occasionally verbalize it to others. -If the theory is wrong, then memory recall is likely to be inaccurate -One "folk" theory that could influence memory: Perhaps the "narrative" some people believe is that they're always getting better
Union
All outcomes in either A or B -"At least one head" or "At least one tails" -So "A or B" = HH, HT, TH, and TT -In this case, "A or B" = S
What is the benefit of forethought?
Allows a conceived future to have a causal impact on current behavior -foreseeable outcomes serve as current motivators -Planning strategically -Creative solutions can be identified and implemented
Compound Events
An event with more than one outcome -Intersection of A and B "At least one head and at least one tail" so "a and B" = HT and TH
How do people tend to mentally represent categories?
As networks of associated features
Describe Strack, Martin, and Schwarz's (1988) research
Asked participants either: How happy are you? then How many dates have you been on in the past month? or the reverse The order of the question frames the scenario and changes the judgment
Constructive
Assessing probabilities rationally
Affective Forecasting
Attempts to predict future affects (emotional states)
What is the danger of using the Availability Heuristic?
Availability-based estimates aren't always accurate
Conditional Probability (P)
Central to science, where some events have already occurred (ie: we have evidence) *A given that B has already occurred
What are people usually?
Boundedly Rationally -Constrained/limited by rationality
What is another word for "Runs"? What does it mean?
Bunches -Groups of answers/results that are all the same eg: A A A B B B B C C C C D D D D D D D B B B B A A A A
Give an example of Causal Reasoning in a well-defined problem-solving space
Carefully estimate the probability of each event in isolation, and then calculate the probability of conjunction eg- on 1 roll in craps, p(non-7) is high! 30 ways to get a non-7, so 30/36 = .83 To calculate the probability of a 5-roll "run" of non-7s: .83^5 = .40
How can people protect against mistakes from the Representativeness Heuristics?
Carefully represent the situation (use graphs)
Give some examples of effective alternatives to narratives?
Causal decision theory
What does Gigerenzer say about decision making?
Fast and Frugal Heuristics
What must be avoided when calculating Disjunction events?
Double-Counting
Explain D. Gardener's Science of Fear
Due to a very large population on the Earth, the occurrence of rare events (including extremely rare ones) will occur many times daily. -Improbable becomes common -Denominator blindness and Probability neglect
What is System 1 [Processing] and how does it relate to heuristics?
Fast, intuitive reactions and instantaneous decisions govern most of our lives -can help distinguish between proximal and distal dangers quickly and (usually) immediately
What role does emotion play in decision making?
Emotions *"mechanisms that set the brain's highest-level goals." -triggering emotions leads to creation of subgoals and sub-subgoals that are called thinking and acting
Causal Decision Theory
Emphasizes the distinction between causal and spurious (fake) relationships -Causal Expected Utilities are better than evidential expected utilities
Describe Daniel GIlbert's book Toward a Happier Future Self
Experience from a random other can (occasionally) be more useful in predicting future experience
Why are experienced clinicians more vulnerable than students to errors in decision making?
Experienced clinicians are more familiar with criterion and thus process the given information more automatically (Type 1 Processing)
How might we use insights to increase chances people will be willing to undergo subsequent aversive procedures (according to Redelmeier and Kahneman, 1996b)?
Extend the procedure to include a less unpleasant ending
Denominator Blindness
Failure to put numbers into context -The media tells people the the how many but not out of how much -"X people were killed" and not "out of Y population"
What is the susceptibility hypothesis?
Frequently occurring events are more susceptible to mood effects than less frequently occurring events -could activate system 2 and encourages habituation
How are external aids helpful in solving problem?
Help clearly see the optimal solution path
What solution does the brain find to combat the challenges?
Heuristics: Mental Shortcuts
What were Fredrickson and Kahneman's (1993) findings when measuring instant vs remembered utility?
High positive correlation between peak-end average and remembered utility, with ratings entirely unaffected by duration
What are the 4 possibilities of responding in the Signal Detection Theory
Hit: Signal present and detected Miss: signal present but not detected False Alarm: signal detected but not present Correct Rejection: signal not present and not detected
Alban and Kelly (2013)
How sampled ideas can influence judgment -pillows with words attached -Heavier pillows = more memorable -Priming "Lightweight" = new/improved eliminates effect
What is a fairly effective debiasing question?
How would you have explained the occurrence of the outcome that did not happen?
List the Principles of Probability Theory
I. 0 ≤ p(A) ≤ 1 II. a.) p(S) = 1 b.) p(Ø) = 0 III. a.) Using "Or" b.) Using "Ø" IV. Conditional P p(A|B) = p(A and B)/p(B)
Experienced Utility
Immediate subjective pleasure and pain associated with an event
Small-Sample Fallacy
In decision making, the assumption that a small sample will be representative of the population from which it is selected. This assumption often leads to incorrect decisions
What does Judgments Under Uncertainty: Heuristics and BIases say about the Hindsight Bias?
In hindsight, people consistently exaggerate what could have been anticipated in foresight -people even misremember their own predictions. With outcome knowledge in hand, they become "anchored" on their hindsight perspective
How might researchers conduct a study that reflects the awareness of the Run Confound?
Include a control group -Regression will occur in both groups
In the context of ATF, distinguish between integral emotion and incidental emotion
Integral Emotions: Encompasses influences of subjective experiences that are normatively relevant to present judgments and choices Incidental Emotions: -Encompasses the (sometimes) puzzling influence of subjective emotional experiences that should be normatively irrelevant to present judgment and choices
List and describe the research and their findings of too many choices
Jams 6 options -> 40% stopped, 30% purchased 24 options -> 60% stopped, 3% purchased Extra credit short list -> 74% long list -> 60%
Why are people susceptible to the Durability Bias?
Rationalization ability -Tendency to make good out of bad and make good better
Explain List's (2002) and Alevy, List, and Adamowicz (2003) way of increasing rationality
List (2002) -More value placed on 10 perfect cards over 10 perfect cards and 3 not so good ones Violation of Dominance Alevy et al. -If pricing both sets at the same time, estimates obey the dominance rule -System 1 dominates in separate evaluations
Counterfactuals
Listing how an event could have come out differently (used to decrease hindsight bias)
Explain how a threshold would work in determining the best course of action
Lowering the threshold of positive criteria increase the number of false positives as well -Can cause habituation to alarm and decrease responsiveness in the case of actual alarms
What does the text mean by Rational Assessment?
Making sure that a given set of probabilities follows the "Principles of Probability"
What would happen without the Illusion of Control?
May feel they have no free will -Maximize immediate rewards over long term
When do people tend to respect base-rate information?
Only when there is no description given
Why is Principle 3 so important?
Summing events when intersection ≠ Ø leads to double counting of some probabilities
Reconstruction in regard to Hindsight
Memory reconstruction processes are partially constrained by narratives -"Often, it is the story that creates the memory, rather than vice versa"
Heuristics
Mental shortcuts or "rules of thumb" that often lead to a solution (but not always).
Remembered Disutility
Negative retrospective evaluation of an occurrence *Peak-End average *Essentially no attention to duration
Describe what happens if someone perceives no control. What if they do perceive control?
No control -Promoting autonomic arousal -Stress hormone release -Immune system suppression -Maladaptive behaviors Control -Increased pain tolerance -Lower anticipation -Increased tolerance to aversive noise
Probability of match/mismatch often decide based on what?
Number of links (with some attention to "weights")
Feedback Loop
Occurs when an output of matter, energy, or information is fed back into the system as an input and leads to changes in that system. -More fear, more reporting, more fear, more reporting, etc.
What did Lange and Roth (1975) find using Yale undergraduates?
Overall, at chance; however, some more correct on first 15 coin tosses (in a riggered condition) Guessed more correctly: Results- Wow! I'm better than average!
Standard Notations. List and describe each symbol
P= Probability Capital Letters= Events S = Set of all possible outcomes
What is the key to the Prospect Theory?
People make judgments relative to moving a reference point (Current state of mind) -Reference points are elastic
What effect does Regression Toward the Mean have on decision making?
People make non-regressive predictions and fail to adequately anticipate actual results eg: Investing in a Company because they are currently doing well reward vs punishment
What is the proper way to reason about chance (an important message of the book)?
People should use probability theory to organize thinking about all judgments under uncertainty, "even where we know much more (or less) about the relevant causes than we do in a casino. But we tend to deny the random components even if trivial events that we know to be the result of chance"
Chaining Principle
The process of connecting a series of smaller behaviors to form a relatively long sequence of activity *Action without replacement
Describe Fredrickson and Kahneman's (1993) research findings on pain and duration
Preference for more over less pain -7 mins after procedure, when asked which trial they'd prefer to repeat, they preferred Long > Short
What is the relevance of counterfactuals to Hindsight Bias?
Present opposing ideas which help show how an outcome was not as obvious as it seems after it occurs
Explain Tversky and Kahneman's study on heuristics (1974)
Presented a condition and asked participants to categorize person based on description -eg: "Steve is very shy and withdrawn, invariably helpful, but with little interest in people, or in the world of reality. A meek and tidy soul, he has a need for order and structure, and a passion for detail." What is Steve's Occupation? Salesman or Librarian? *most chose librarian, despite the presence of more salesman existing
What is the most successful descriptive theory of decision making?
Prospect Theory -doesn't describe everyone's decision making
Sketch out the Process Model of Decision Making. Explain each stage of the model
Question -> Consider evidence -> Construct mental model of the situation -> Infer decision -> Confidence is determined by one or more of factors -> Report decision and confidence
What is the main message of the book?
Rational analysis requires a systematic, comprehensive representation of situations and alternative outcomes, in order to assess the important underlying probabilities of events -Certainly true in planning for the future, equally true in rightly interpreting the past
What is one warning of Single-Peakedness?
Single-peakedness becomes a much more complicated topic when we move beyond one dimension (eg- time) to situations involving several options/vectors in n-dimensional space
What are researchers interested in explaining about heuristics?
The processes central to heuristics *to understand when they are useful *To account for heuristic-based errors
External Cues
Stimuli in the outside world that serve as triggers
What is the power of a good story (ie-how does a story influence perception and decisions)?
Story -makes a collection of events seem more coherently interconnected, resulting in perception that flow of events was obvious
What is the key to good use of heuristics?
Study both the mind and the structure of the environment
How can we make subjective probability judgments? How do moods affect these judgments?
Subjective Probability Judgments -Retrieval of information from long-term and use of inference procedures -Mood employs a relative attentional filter which encodes bias into probabilities upon retrieval eg: Believe good things when in a good mood
What is the major difference between Prospect Theory and the Standard Economic Theory of Diminishing Marginal Utility?
The SETDMU assumes that decision makers frame their choices in terms of the final consequences
Subadditivity
The actual probability of all events is less than the sum of estimated probabilities of all possible events. *Support for each proposition is difficult to retrieve (retrieval fluency) *equals more than 100%
Discriminability
The degree to which you can distinguish between old (targets) and new (lures) items
On what are frequency estimates often based?
The ease of retrieving examples from memory or the ease of imagining them -greater the ease = more probable the event
Summarize some of the reasoning/examples that Keys and Schwartz use to argue that a complete psychological view of decision making wouldn't be quick to label people's decisions as "irrational"
The experience of the effect is just as important as the actual decision -most satisfying results is the most rational choice (even if logically irrational) eg: man afraid of elevators
Ego Depletion
The idea that self-control is a limited resource. If you use a lot of it, it can get used up and you'll have less to use in the future
Disjunction Events
The probability of the occurrence is not dependent on another event an "or" event eg: -The occurrence of a 1 or a 6 or both p = 20/36 = 55.56%
What is the problem we face when trying to increase rationality?
We can only see one formation at a time [usually] -stuck with one alternative -can't see how other things play out
What does the text mean by the "Power of a story"?
We continuously construct, access, and update mental/situational models (mental representations)
Contrast Model
We perceive similarity by making very rapid comparisons of attributes of the 2 or more entities whose similarity is being evaluated
Distribution of Ignorance Fallacy
When people mistakenly believe something to be true that is not because they don't know enough about the subject, or have not been given enough evidence, to know otherwise -appeal to ignorance
When are the "rules of perception" useful?
When studying how people make judgments -"invariance cannot be achieved by a finite mind"
When do people often terminate their search among alternatives?
When they identify a satisfying options
Give an example of deliberating too much on a decision
Whether to go out or not
Describe Lichtenstein et al.'s (1978) research on availability heuristic
Which causes more deaths in the USA? a) traffic accidents b) stomach cancer -Typical guess was that traffic fatalities happened more than stomach cancer *Reported deaths make it seem a different way then it originally was
Describe Goldstein and Gigerenzer's work (2002) on Recognition Heuristic
Which city has a larger population? A) San Diego B)San Antonia *66% accuracy with University of Chicago Undergraduates *100% accuracy with German students *San Diego was recognized as an American city by almost all of German students. San Antonio = 50%
Is too much choice a bad thing?
YES!
Are we "insufficiency surprised" by experiences?
Yes -Hindsight bias
Do Casinos know about the Gambler's Fallacy? If so, how do they use it?
Yes -Show people the previous events
Would an alternate presentation of base rate influence a decision? Why and/or how?
Yes -When presented with statistical base rates, people gave more weight to base rate and judgments were fairly accurate -When presented with causal base rates, responsibility is correlated with a target variable Why? -People easily construct a causal story
What is Sunstein's (2003) Probability Neglect?
a cognitive bias that is the tendency to disregard probability when making a decision under uncertainty and is one simple way in which people regularly violate the normative rules of decision making -Small risks are typically either neglected entirely or hugely overrated
The case of John P.
a meek man, 42 years old, married, with two children. His neighbors describe him as mild-mannered, but somewhat secretive. He owns an import-export company based in New York City, and he travels frequently to Europe and the Far East. Mr. P. was convicted once for smuggling precious stones and metals (including uranium) and received a suspended sentence of 6 months in jail and a large fine. Mr. P. is currently under investigation. Please rank the following statements by the probability that they will be among the conclusions of the investigation. Remember that other possibilities exist and that more than one statement may be true. *Mr. P. is a child molester. *Mr. P. is involved in espionage and the sale of secret documents. *Mr. P. is a drug addict. *Mr. P. killed one of his employees. *Mr. P. killed one of his employees to prevent him from talking to the police.
Meta-analysis
a method for statistically combining the results of many different research studies
Recognition Heuristic
a rule of thumb in which a higher value is placed on the more easily recognized alternative
Null Set
a set with no elements -used to express the fact that 2 events are mutually exclusive *A and B = Ø *So, p(A or B) = p(A) + p(B)
Base Rate
a statistic used to describe the percentage of a population that demonstrates some characteristics. -Indicates probability based on the absence of information
Prediction
a thing predicted; a forecast.
What is the Causal Incoherence Effect?
an observation is causally coherent as an assumed causal relation if either the cause or effect are both present or both absent -can't come to causal conclusion with only partial information
Decision Utility
anticipated satisfaction related to predicted/possible outcomes of a decision
Give example(s) of issues with the Hindsight Bias
medical malpractice suits- "They should have known better"
Search of Associative Memory (SAM)
multiple trace model retrieval is a cue matching process probabilistic based on relation to other traces and strength
How is the Disjunction Probability error related to the Conjunction Probability Error?
the "flip side of the 'conjunction probability error" p(A) ≥ p(A & B), so p(Ā) ≤ 1 - p(A & B)
Conjunction Probability Error (Conjunction Fallacy)
the belief that a specific combination of events can be more likely than parts of the combination p(Ā) ≤ 1 - p(A & B)
Anticipated Regret
the feeling that we will strongly look back on our decision with negative emotion
