L13 - Decision Making

Question 1

Kahneman & Tversky’s Heuristics and Biases:

Answer 1

• Availability Heuristic
• Representativeness Heuristic & Conjunction Fallacy
• Primacy Heuristic (Anchoring and Adjustment)
• Framing Effects

Question 2

Other Biases:

Answer 2

• Confirmation Bias
• Illusory Correlation
• Hindsight Bias
• Better-than-average Effect

Question 3

Availability Heuristic =

Answer 3

Judging the frequency or probability of events based on how available they are in memory

• E.g. What percentage of household chores do you do” → Overestimate because you remember doing a chore recently

Question 4

Representativeness Heuristic & Conjunction Fallacy =

Answer 4

Representativeness Heuristic = Judging frequency or probability based on how well an event or person fits one’s mental prototype E.g. Kevin is short, slim, and likes to read poetry. More likely that he is a literature university lecturer or a truck driver?

• Tends to be used (default strategy/heuristic) when deciding: “Would person X be good at doing Y?”; or “Does X belong to the group of Z people?”
• These are the sorts of judgements made in job selections, choosing PhD students, friends, etc.

Conjunction fallacy: Believing the occurrence of two events is more likely than each event separately (logical error)

• E.g. Linda is 31, outspoken and very bright. At uni she earned an honours degree in philosophy. As a student, she was deeply concerned with discrimination and other social issues, and participated in anti-government demonstrations. Is she more likely to work in a bank; or work in a bank AND be active in the women’s movement?

Question 5

Primacy Heuristic (Anchoring and Adjustment):

Answer 5

Giving inordinate weight to the first pieces of information encountered

• E.g. Estimate: 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8 x 9 = ?; and 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = ? → Both give same result but the initial numbers for each set (1-4 and 9-6) become anchored and thus a higher estimate will be given for the second set

Influences impression formation and management First impressions endure

• Appearance effects (e.g. glasses, height):
  
  • Halo effects (enduring + judgements) &
  • Horn effects (enduring - judgements)
• Labelling effects: Persistence of verbal categories (e.g. personal - “friend”, “enemy”, “nerd” or professional - “criminal”, “schizophrenic”, “autistic”, etc.)

Question 6

Framing Effects:

Answer 6

The way a decision is put to us influences the decision outcome

• E.g. 10% Fat vs 90% fat free

Question 7

Confirmation Bias:

Answer 7

Tendency to seek out confirmatory information only

• E.g. Watson’s card task

Question 8

Illusory Correlation:

Answer 8

The belief that two things go together when are in fact not related

• E.g. Invalid diagnostic tools: The Draw a Person (DAP) test

Question 9

Hindsight Bias:

Answer 9

Knew-it-all-along effect

The inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

“I told you so”

Question 10

Better-than-average Effect:

Answer 10

Tendency to rate one’s self (and one’s group) as better than average on most positive abstract features

• Pervasive positive/optimistic bias, but does interact somewhat with culture and affect (especially depression)

Question 11

Cognitive Conceit & Improving Judgement and Decision Making:

Answer 11

Because we are poor judges, we are also poor at judging our own limitations

• This limits self-reflecting on selective attention, memory, & automatic use of heuristics

Dawes ‘Cognitive Conceit’: The illusory/deluded belief that our perceptions, memories and judgements are accurate

Question 12

Improving judgement and Decision making:

Answer 12

• Acknowledging limitations
• Not relying solely on intuitive/automatic judgements
  
  • Slow down and pay attention (mindfulness)
  • External supports (write things down)