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Decision making
46
Decision making
Cognitive Psychology
BSc in Psychology
Marbella International University Centre
2022/2023 Fall Semester
Gloria Nogueiras Redondo
gloria.nogueiras@miuc.org
Decision making
Process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from or among them
Decision making
Decision making process
Classical decision theory
Classical decision theory
Devised by economists, staticians, and philosophers
Mathemathical models for human behaviour
Model of economic man and woman
(Edwards; 1954; Slovic, 1990)
1. Decision makers are fully informed regarding all possible options for their decisions and of all possible outcomes
Model of economic man and woman
2. They are infinitely sensitive to subtle distinctions among decision options
3. They are fully rational with regard to their choice of options
Subjective expected utility theory
Subjective expected utility theory
In making decisions, people will seek to maximize pleasure and to minimize pain
Calculations of two things: subjective utility & subjective probability
"Real" decision making
"Real" decision making
Heuristics
Heuristics
Mental devices that lighten the cognitive load of making decisions, but also allow for greater chance of error
(mental "shortcuts")
Satisficing
We select an option as soon as we find one that is good enough to meet our minimum level of acceptability
Satisficing
Elimination by aspects
We eliminate alternatives by focusing on aspects of each alternative, one at a time, until we are left with a single option
Elimination by aspects
Representativeness heuristic
All the families having exactly six children in a particular city were surveyed. In 72 of the families, the exact order of births of boys and girls was G B G B B G
What is your estimate of the number of families surveyed in which the exact order of births was B G B B B B?
(Kahnemna & Tversky, 1972)
Representativeness heuristic
We judge the probability of an uncertain event according to:
1. How obviously it is similar to or representative of its population
2. The degree to which it reflects the salient features of the process by which it is generated (such as randomness)
Man-who argument
Man-who argument
Reliance on anecdotal evidence
When presented with statistics we may refute those that with our own observations of
"I know a man who..."
Why do we use the representativeness heuristic?
- It is easy to use and often works (e.g. will it rain today?)
Why do we use the representativeness heuristic?
- We mistakenly believe that small samples (of events, people...) resemble in all respects the whole population from which the sample is drawn
Availability heuristic
We make judgments on the basis of how easily we can call to mind what we perceive as relevant instance of a phenomenon
Availability heuristic
Study 1 (Tversky & Kahneman, 1973)
Consider the letter R. Are there more words in English language that begin with the letter R or that have R as their third letter?
Study
Most respondents said that there are more words beginning with the letter R -> This is not true
Anchoring
People adjust their evaluations of things by means of certain reference points called "end-anchors"
Anchoring
Quick exercise
Quick exercise
Quickly (in less than 5 seconds) calculate mentally the answer to the following problem:
8 x 7 x 6 x 5 x 4 x 3 x 2 x 1
Quick exercise
Now, quickly (in less than 5 seconds), calculate your answer to the following problem:
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8
Quick exercise
The median (middle) estimate for the participants given the first sequence was 2.250
For the participants given the second sequence, the median was 512
The actual product for both is 40.320!!!
However, people provide a higher estimate for the first sequence than for the second because their computation of the anchor (the first few digits multiplied by each other) renders a higher estimate from which they make an adjustment to reach a final estimate
Framing
The way in which the options are presented influences the selection of an option
Framing
Do heuristics help us or lead us astray?
Do heuristics help us or lead us astray?
Heuristics do not always lead to wrong judgments or poor decisions!!!
Sometimes, heuristics are amazingly simple ways of drawing sound conclusions
"Take-the-best" heuristic
1. In making a decision, identify the single most important criteria to you for making the decision
2. Make your choice on the basis of that attribute
E.g. "Take-the-best" heuristic
Biases
A bias is a particular tendency, trend, inclination, feeling, or opinion, especially one that is preconceived or unreasoned
Biases
Illusory correlation
Illusory correlation
Predisposition to see particular events or attributes and categories as going together, even when they do not
Overconfidence
Overconfidence
An individual's over-evaluation of her or his own skills, knowledge, or judgment
Hindsight bias
Hindsight bias
When we look at a situation retrospectively, we believe we easily can see all the signs and events leading up to a particular outcome
Fallacies
A fallacy is a mistaken belief, especially one based on not solid arguments
Fallacies
Gambler's fallacy
Gambler's fallacy
Mistaken belief that the probability of a given random event, such as winning or losing at a game, is influenced by previous random events
"Hot hand" effect
Belief that a certain course of events will continue
"Hot hand" effect
Conjunction fallacy
An individual gives a higher estimate for a subset of events than for the larger set of events containing the given subset
Sunk-cost fallacy
Decision to continue to invest in something simply because one has invested in it before and one hope to recover one's investment
Sunk-cost fallacy
Opportunity costs
"Prices" paid when making a choice
Opportunity costs
Try to look at these opportunity costs in an unbiased way!
Group decision making
Group decision making
Benefits of group decisions
- Joint expertise of each of the members
Benefits of group decisions
- Increase in resources and ideas
- Improved group memory
Successful groups in decision making
Successful groups in decision making
- Small group
- Open communication
- Common mind-set
- Members identify with the group
- Members agree on acceptable group behaviour
Group Think
Group Think
Phenomenon characterized by premature decision making that is generally the result of group members attempting to avoid conflict
(Janis, 1971)
Conditions that lead to Group Think
- Isolated, cohesive, and homogeneous groups
Conditions that lead to Group Think
- Objective and impartial leadership is absent
- Stress and anxiety
Symptoms of Group Think
- Closed-mindedness
- Rationalization (distorting reality)
Symptoms of Group Think
- Silencer of dissent (ignored, criticized)
- "Mindguard" for the group
- Feeling invulnerable
- Feeling unanimous
Outcomes of
Group Think
Defective decision making due to...
Outcomes of Group Think
- Examining alternatives insufficiently
- Examining risks inadequately
- Seeking information about alternatives incompletely
Antidotes for Group Think
- The group leader should encourage constructive criticism, be impartial, prevent false conformity to a group norm, and ensure input from outside people
Antidotes for Group Think
- Creation of subgroups to consider alternative solutions to a single problem
To explore further
To explore further
- The Best Headspace for Making Decisions. Anger is not the best way to approach a big choice—but neither is happiness. https://www.theatlantic.com/science/archive/2016/09/the-best-headspace-for-making-decisions/500423/
- A neuroscientist who studies decision-making reveals the most important choice you can make. https://www.weforum.org/agenda/2017/08/a-neuroscientist-who-studies-decision-making-reveals-the-most-important-choice-you-can-make
- Discover your decision making style: https://www.kent.edu/career/discover-your-decision-making-style
Bibliography
Bibliography
The contents of this presentation are based on:
Sternberg J. P. & Sternberg, K. (2012). Cognitive Psychology (6th edition). USA: Cengage Learning. Available in MIUC Library.
-> Chapter 12. Decision making and reasoning