Cog & Bio Decision Making Flashcards
(28 cards)
What is base rates neglect?
A failure to take into account basic frequency of something in a population
E.g - Joseph is a man who was educated in private school, dresses flamboyantly and is bisexual - is he more likely to become a farmer or opera singer - most people say opera singer even though farmer is way more common
How can structures of questions result in people neglecting fact?
The structure of the questions results in people neglecting the fact that a feminist bank clerk is still a bank clerk
What is bayes’ theorem?
Probability of hypothesis given data (‘updated belief’) = probability of data given hypothesis (‘new info’) x prior probability of hypothesis (‘base rate’)
What does bayes theorem do?
- establishes the strength of evidence for a belief - this is very useful for decision making
- combines base rates with new information (belief updating)
- is mathematically correct and produces optimal set of beliefs
What should you do if there’s no new information?
Consider base rate
Heuristics meaning?
Strategies that ignore part of the information, with the goal of making decisions more quickly and frugally than more complex methods
Algorithms meaning?
A precise method that always gives the same, correct answer
What is representativeness heuristics?
Deciding something / someone belongs to a given category because she appears typical or representative of that category
What is availability heuristic?
Frequencies of events estimated on the basis of how easy it is to retrieve them from long-term memory - murder seems more common than suicide because murder is reported more in the news
What is affect heuristic?
‘Gauge your feeling of dread that risk A and risk B respectively evoke and infer that risk to be more prevalent for whichever dread is higher’
What do explicit descriptions do?
Increase perceived probabilities
E.g what is the risk of a terrorist attack OR
what is the risk of a terrorist attack by Al-Qaeda
What is our decision making based on?
What we are told, how things are described drastically contribute towards people forming mistaken beliefs
What did Herbert Simon propose in his fast and frugal heuristic?
- environment may not give us info we need to make decisions
- we make decisions because they are fast and frugal - bounded reality
- semi-rational but constrained by minds resources
- quick decision makers running cheap ‘mind ware’ may outperform slower fully rational ones
What did Daniel Kahneman propose in his thinking fast and slow theory?
2 independent decision making processes inside ourselves - dual processing theory
- system 1 - effortless and implicit (not open to introspection), fast, automatic - often emotionally charged, difficult to control or modify - what we default to if we aren’t careful - this is where you’re more likely to make biased judgements
- system 2 - more slow, serial, effortful, governed by rules, might monitor and evaluate judgement by system 1, relatively flexible, evidence = rationale (system 2)
What did Gerd Gigerenzer propose in his theory of ‘if we’re so dumb how come we’re so smart’?
Heuristics (gut feelings) usually give the right answer out of the real world - evidence = ‘the recognition heuristic’ (choose what you know over what you don’t) tends to give the right answer across a range of problems
What is formal reasoning?
Normally done under aspects of uncertainty
What is inductive reasoning?
Reason that something is true because it’s always been true in the past for you - draws general conclusions from particular instances e.g concluding that all swans are white because many are
What is deductive reasoning?
Allows us to draw conclusions that are certain
What is modus ponens?
If P is true, then Q is true
P is true
Therefore Q is true
Example :
If it’s raining, then Nancy gets wet
It’s raining
Therefore Nancy gets wet
What is modus tollens
If P is true then Q is true
Q is false
Therefore P is false
Example :
If it’s raining then Nancy gets wet
Nancy does not get wet
Therefore it’s not raining
What is belief bias?
Tendency to accept invalid conclusions if they are believable and reject valid (but unbelievable) conclusions
E.g
All children are obedient - all girl guides are children, therefore all girl guides are obedient
What is expected utility?
Probability of outcome x utility of the outcome
E.g
I’ll give you £200 if you flip heads on a coin and fine you £100 if you flip tails - expected utility take = (.5 x £200) = £100 + (.5x£-100) = £-50 - £100-£50 = £50
What is outcome bias?
Judging a decision by its ultimate outcome instead of based on the quality of the decision at the time it was made, given what was known at the time
What does unbiased valuation look like on a graph?
Straight line through the Y and X axis crossover
