Heuristics & Decision Making

The availability heuristic

- Involves a judgement about the probability of an event based upon how easily an hypothesis can be brought to mind. - The most available mental alternative is selected. Problems arise when the actual frequency of an event fail to correspond to the mental availability. For example: A recent air crash may produce an over estimation of the dangers of flying (Slovic, 1984)

Framing effect

Many of our decisions are influenced by irrelevant aspects of the situation, e.g. the precise way in which an issue is presented. This phenomenon is known as framing. The frame, to some extent, makes one perspective more available than others.

Biases in decision making

The tendency to overestimate rare probabilities & underestimate frequent ones. This bias helps to explain why people buy insurance and why they enter lotteries - Amplified by: - Availability heuristic. - Vivid memories of rare successes. - Biases in the perception of probability are a source of less than optimal decisions

Decision making

Everyday we use decision-making and logical reasoning (these are interrelated with problem solving). Decision making refers to assessing and choosing among several alternatives. Outcome is evaluated in terms of consequences. For example: Should I email the lecturer for help about my essay? Or, should I call my friend who's finished their essay?

Wright & Bower (1992)

Found that people in a good mood over estimate the probability of good things occurring. Whilst, Individuals in a bad mood exaggerate the likelihood of being mugged or other negative events.

Reasons for using heuristics

Humans use decision making heuristics for:- - Simplifying rules of thumb - Simplify cognitive complexity - Speed decision making - Reduces the burden on working memory - Can lead to errors in special circumstances

Decision making & heuristics

In decision making, the information is uncertain. Much of the information may be missing. Furthermore, there are no clear cut rules of how to proceed from information to conclusion!

Confirmation Bias

Tendency to look for evidence that confirms current beliefs rather than looking for evidence that could disconfirm beliefs

Overconfidence

Tendency to overestimate correctness in factual knowledge, beliefs and decisions

Estimating outcomes

We have a tendency to over estimate rare probabilities - and under estimate very frequent probabilities.

Heuristics in everyday life

Heuristics is generally helpful in everyday life. - E.g. if you were asked: are there more psychology students at MMU or more students studying Biology? According to this heuristic, you would say more psychology students - as they are more 'available' to you! - Remember, a heuristic is a 'rule of thumb' which is 'generally' accurate. Chances are there may be more Psychology than Biology students!? However, this form of decision-making can lead to errors:

The representativeness heuristics

- Refers to a decision makers tendency to assess the likelihood of an event occurring based on one's impressions about similar occurrences. - Like stereotyping, we judge intuitively by comparing the likelihood of something with our preconceived ideas and make conclusions about whether an example belongs to a certain group or not

Logic

A friend says that if they finish their community essay in time, they'll call you about going out that night. Your friend doesn't call you, so you draw the logical conclusion that they didn't finish their essay!

Hindsight Bias

Baruch, Fischoff and MacGregor (1982):- - People are unrealistically confident about their predictions after the event. - They asked people to predict whether a certain event would occur, and then rate how confident they were about their prediction. - After the event time line, it was found that people were more confident than accurate.

The anchoring and adjustment heuristic

Refers to a decision makers tendency to make a judgement about the probability of an event based on an earlier assessment. However, this is problematic as the initial judgement biases the final assessment. For example:If you believe New York is a crime infested city (90% probability of being mugged and you found out that the actual probability was 1%, you may alter your assessment to 75%). Thus, adjustments are typically insufficient and biased towards the initial starting value - The Anchor

Heuristics

Representativeness - we judge a sample to be likely because it looks similar to the population from which it is selected. Availability - used when we estimate frequency in terms of how easily we can think of examples of something. Anchoring and Adjustment - refers to a decision makers tendency to make a judgement about the probability of an event based on an earlier assessment

Vallone et al. (1990)

Studies students likelihood of experiencing personal events (e.g. dropping a course of study, romantic partnership)

Heuristic approach

There is often no certain answer to the problem or no good way of deciding whether a particular type of solution is the correct approach. People make decisions and base their reasoning on a variety of strategies; The heuristic approach is one such strategy. Heuristics are mental short-cuts or a "rule of thumb". It is an informal method that works under some circumstances, for some of the time, but it is not guaranteed to yield the correct answer.