Chapter 12: Decision Making

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Chapter 12 Decision Making
Joel Cooper University of Utah
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Decision Making

• 2 different types of models for decision making
• Prescriptive models
• Models describing the best way to make a decision
• Descriptive models
• Models describing the way decisions are actually
  made
• Cognitive psychologists are interested in how
  people actually make decisions

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Classical Decision Theory

• Assumed decision makers
• Knew all the options available
• Understood pros and cons of each option
• Rationally made their final choice
• Goal was to maximize value of decision

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Howards Dilemma

• Thagard Milgram (1995)
• An eminent philosopher of science once
  encountered a noted decision theorist in a
  hallway at their university. The decision
  theorist was pacing up and down, muttering, What
  shall I do? What shall I do?
• What's the matter, Howard? asked the
  philosopher.
• Replied the decision theorist, It's horrible,
  Ernest I've got an offer from Harvard and I don't
  know whether to accept it.
• Why Howard, reacted the philosopher, you're
  one of the world's great experts on decision
  making. Why don't you just work out the decision
  tree, calculate the probabilities and expected
  outcomes, and determine which choice maximizes
  your expected utility?
• With annoyance, the other replied, Come on,
  Ernest. This is serious.

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Subjective Utility Theory

• Goal
• Seek pleasure and avoid pain
• Actual judgment of pleasure and pain is made by
  each decision maker (subjective)

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Satisficing

• To obtain an outcome that is good enough
• Term introduced by Herbert A. Simon in his Models
  of Man 1957
• Simon noted that humans are rational but within
  limits (bounded rationality)

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Elimination by Aspects

• Tversky (1972)
• Begin with a large number of options
• Determine the most important attribute and then
  select a cutoff value for that attribute
• All alternatives with values below that cutoff
  are eliminated
• The process continues with the most important
  remaining attribute(s) until only one alternative
  remains

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Try It!

• Write your name on a piece of paper and indicate
  the truth of the following statements
• 1 means you are sure it is true, 10 means you are
  sure it is false

Collect the sheets.
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Try It Answers

• Martin Luther King was 39 when he died
• The gestation period of an Asian elephant is not
  225 days--It is 645 days
• The earth is the only planet in the solar system
  that has one moon. False, Pluto also has one moon
• The number of lightning strikes in US is
  approximately 25 million
• The Rhöne is not the longest river in Europe

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Dunn Story (1991)

• Examined overconfidence of students
• At beginning of the semester students were given
  37 items like the ones on the previous slide
• At end of the semester, students were asked to
  indicate which events had actually occurred

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Dunn Story (1991)

• Results indicated that all students exhibited
  large tendencies toward overconfidence
• Confidence influences how we make decisions, yet
  our confidence may not be based on a realistic
  estimate of events or skills
• Why is this a problem?

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Heuristics Influencing Decision Making

• Representativeness
• Availability
• Anchoring adjustment
• Overconfidence
• Illusory correlation
• Hindsight bias
• As if
• Confirmation Bias
• Framing
• Mental Representation

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Representativeness Heuristic

• Judgments strategy in which we make estimates on
  how similar (or representative) an event is to
  its population.
• Coin toss Which is more representative?
• HHHHHTTTTT
• HTHTHTTHHT

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Representativeness Heuristic

• Frank is a meek and quiet person whose only hobby
  is playing chess. He was near the top of his
  college class and majored in philosophy. Is
  Frank a librarian or a businessman?
• Consistent with librarian stereotype, but there
  are many more businessmen, so base rates make it
  much more likely that Frank is a businessman.

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Representativeness Heuristic

• Judge probability of an event based on how it
  matches a prototype
• Can be accurate
• Can also lead to errors
• Most will overuse representativeness
• i.e. Steves description fits our vision of a
  librarian, Linda seems to be more of a feminist

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Gamblers Fallacy

• Suppose you are at a roulette wheel and the last
  8 spins have come up red.
• Do you bet on red or on black for the next spin?
• Red and black equally likely -- no statistical
  reason to select red over black (or visa versa).

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Availability Heuristic

• In the English language, are there more words
  beginning with the letter K or more words with K
  in the third position?
• People often report 2 x as many words beginning
  with K
• But there are many more words with K in the third
  position than in the first.

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Availability Heuristic

• The ease of bringing an example to mind is a
  means of estimating the probability of occurrence
  (likelihood)
• Frequent events will be easy to recall
• Rare events will be difficult to recall
• Bias -- tendency to overestimate rare events-
  Lightening Strikes, JAWS, Gambling

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Availability Heuristic

• Making judgments about the frequency or
  likelihood of an event based on how easily
  instances come to mind
• Actual frequency influences how easily evidence
  comes to mind but so do other factors
• Media
• Vividness

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Schwartz (1991)

• Manipulated how many instances participants had
  to give of previously being assertive
• One group had to recall six examples of when they
  had been assertive
• A second group had to think of twelve examples
• Both groups were then asked to score their
  assertiveness
• Participants who thought of six examples scored
  themselves higher than the group that had
  difficulty thinking of twelve examples
• Pattern of results attributed to the availability
  heuristic

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Koehler (1996)

• Base rates are used when
• Problems are written in ways that sensitize
  decision-makers to the base rate
• Problems are conceptualized in relative frequency
  terms
• Problems contain cues to base rate diagnosticity
• Problems invoke heuristics that focus attention
  on the base rate

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Making Decisions

• Which are you more afraid of?
• Flying in an airplane
• Driving in a car
• Meyers (2001)
• The Air Transport Association reports that 483
  passengers were killed in plane crashes from
  1995-1999 (97 per year). During these years, the
  National Safety Council's Research and Statistics
  Department tells me, we were 37 times safer per
  passenger mile in planes than motor vehicles.

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Base-rate Information

• The actual probability of an event
• How many bank tellers are there in the world?
• How many feminists are there?
• Much research in the 1970s 1980s seemed to
  indicate that base rate information in these type
  of problems were ignored
• Current research focuses on when participants do
  attend to base rates

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Anchoring Heuristic

• If you are given a series of pieces of
  information, you give more weight to early
  evidence in the sequence
• Tendency to give undue weight to evidence which
  occurs early or most recently
• U shaped function

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Anchoring-and-Adjustment Heuristic

• Begin by guessing a first approximation (an
  anchor)
• Make adjustments to that number on the basis of
  additional information
• Often leads to a reasonable answer
• Can lead to errors in some cases

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Anchoring-and-Adjustment

• People are influenced by an initial anchor value
• Anchor value may be unreliable, irrelevant, and
  adjustment is often insufficient

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Anchoring-and-Adjustment

• Participants asked to calculate in 5 secs the
  answer to one of the following problems
• 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8 512
• 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 2,250
• The order of presentation for these two groups
  had a significant impact on their estimates
• The correct answer, in both cases, is 40,320!

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Car for Sale

• Clean
• Fuel efficient
• Dependable
• Slight rust
• High mileage

• High mileage
• Slight rust
• Dependable
• Fuel efficient
• Clean

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Anchoring Bias

• Judicial system -- prosecution goes first
• Three mile island -- pressure relieve valve
  indicated what it was told to do, not what it
  actually did -- decisions made early biased other
  sources of information
• Confirmation bias -- tendency to seek (and find)
  information that confirms initial hypothesis
  (Science/Research)

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Overconfidence

• People tend to have unrealistic optimism about
  their abilities, judgments and skills
• Examine your confidence judgments about future
  events asked on a previous slideare you
  confident your judgments are accurate?

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Try it againPredict your past answer
1 means you were sure it was true 10 means you
were sure it was false
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Illusory Correlations

• An illusory correlation is a perceived
  relationship that does not in fact exist
• Illusory correlations are formed by the pairing
  of two distinctive events
• Redelmeier and Tversky (1996)
• 18 arthritis patients observed over 15 months
• The weather was also recorded
• Most of the patients were certain that their
  condition was correlated with the weather
• The actual correlation was close to zero 
• What illusory correlations may affect your
  decisions?

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Demonstration- Future events

• Predict whether you will experience these events
  this semester
• Obtain an A in your favorite course.
• Have an out-of-town friend visit you.
• Lose more than ten pounds.
• Drop a course after the 5th week.
• Be the victim of a crime.
• Get a parking or speeding ticket.
• How confident are you of your judgment for each
  item? (100, 80, 60.....)

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Hindsight Bias

• The memory of how we acted previously changes
  when we learn the outcome of an event
• Reconstruction after feedback theory (RAFT)
• Proposed by Hoffrage,Hertwig Gigerenzer (2000)
• Allows us to remove clutter by tossing out
  inaccurate information and embracing the right
  answers in our memory

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As If Heuristic

• When several sources of evidence with different
  reliability are presented, people tend to treat
  all cues as if they had the same reliability
• Jurors, Nurses, Military
• Manifestation of cognitive simplification

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Decision Making

• Which cards do you need to turn over to obtain
  conclusive evidence of the following rule A
  card with a vowel on it will have an even number
  on the other sideE K 4 7

X
X
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Decision Making

• Answer
• E -- search for positive evidence
• 7 -- search for negative evidence
• 4 search for positive negative evidence33
  say E only (missing negative evidence)46 say E
  4

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Confirmation Bias
Evidence

• Subjects focus on positive evidence
• Hypothesis-driven behavior
• Cognitive tunnel vision
• Tend to ignore negative evidence (even though
  equally diagnostic)

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Effect of Framing on Decisions

• Which choice would you make?
• Suppose you have invested in stock equivalent to
  the sum of 60,000 in a company that just filed a
  claim for bankruptcy. They offer two
  alternatives in order to save some of the
  invested money
• If Program A is adopted, 20,000 will be saved
• If Program B is adopted, there is a 1/3
  probability that 60,000 will be saved and a 2/3
  probability that no money will be saved

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Rönnlund, Karlsson, Laggnäs, Larsson, Lindström
(2005)

• Examined the impact of framing on risky decisions
  
• Manipulated age (young/older) and type of framing
  (positive/negative)
• Participants read one of 3 scenarios
• Participants selected either a risky or certain
  outcome

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Sample Scenario

• Suppose you have invested in stock equivalent to
  the sum of 60,000 in a company that just filed a
  claim for bankruptcy. They offer two
  alternatives in order to save some of the
  invested money
• Positive Framing
• If Program A is adopted, 20,000 will be saved
  (certain outcome)
• If Program B is adopted, there is a 1/3
  probability that 60,000 will be saved and a 2/3
  probability that no money will be saved (risky
  outcome)
• Negative Framing
• If program A is adopted 40,000 will be lost
  (certain outcome)
• If program B is adopted, there is a 1/3
  probability that no money will be lost, and 2/3
  probability that 60,000 will be saved (risky
  outcome)

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Rönnlund, et.al. Results
Percent selecting the certain option
Type of Framing
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Symbolic Comparison

• Which is bigger
• An elephant or a whale?
• An ant or a termite?
• A bee or a goat?
• A whale or a goat?
• A rabbit or a cat?

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Symbolic Distance Effect

• 1 vs 2?
• 1 vs 5?
• 1 vs 9?
• As the difference increases, time to make
  decision decreases

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Congruity Effect

• Which is smaller 1 vs 2? (faster)
• Which is larger 1 vs 2? (slower)
• Which is smaller 8 vs 9? (slower)
• Which is larger 8 vs 9? (faster)
• When there is a congruity between the
  instructions and the symbols, decisions are
  faster and more accurate

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Mental Representations

• Mental representations are not linear- large
  differences are compressed so that 1 vs 2 is a
  bigger difference than 8 vs 9
• Car 5,000 vs 7,000
• House 155,000 vs 157,000
• Which deal are you most likely to accept?

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Chapter 13 Human and Artificial Intelligence
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What Do You Consider Intelligence?
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Intelligence Is

• Capacity to learn from experience
• Ability to adapt to different contexts
• The use of metacognition to enhance learning

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Emotional Intelligence

• Mayer Salovey (1997)
• The capacity to reason about emotions, and of
  emotions to enhance thinking. It includes the
  abilities to accurately perceive emotions, to
  access and generate emotions so as to assist
  thought, to understand emotions and emotional
  knowledge, and to reflectively regulate emotions
  so as to promote emotional and intellectual
  growth

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Social Intelligence

• Ability to get along with others
• Knowledge of social matters
• Insight into moods or underlying personality
  traits of others

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Historical Trends

• Emphasize psychophysical abilities
• Galton
• Examine relationships of sensory abilities
• Emphasize on judgment
• Binet (1904)
• Identify children needing special instruction
• Compared childs abilities to what the average
  child at that age could do

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Historical Trends

• Terman (1900s)
• Created an English version of Binets test
  (called it the Stanford-Binet)
• Created the intelligence quotient (IQ) divide
  mental age by chronological age then multiply by
  100
• Became the first modern intelligence test

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Types of items on the Stanford-Binet
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Wechsler Intelligence Scales

• Wechsler created scales for adults, children, and
  preschoolers
• Yield 3 scores
• Verbal score
• Performance score
• Overall score
• Most widely used intelligence test

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Types of Items on the Wechsler
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Measurement or Process?

• Measurement structure
• Identify most relevant factors
• Process emphasis
• Identify and examine the speed and accuracy of
  mental manipulations

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Nature, Nurture, or Both?

• Is intelligence genetic?
• Is intelligence acquired?
• Is intelligence a combination of both?

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Factor Analysis

• Primary method used to describe intelligence
  structure
• Correlations among many dependent variables are
  examined with the goal of discovering something
  about the nature of the factors that affect them
• How many different factors are needed to explain
  the pattern of relationships among these
  variables?

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Factor Analysis Matrix
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Number of Factors in the Structure of Intelligence

• Spearman says two
• Thurstone says seven
• Guilford says 150
• Cattell, Vernon, and Carroll propose hierarchical
  models

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Spearmans g Factor

• Two-factor theory of intelligence
• All intellective functioning was due to an
  overall mental ability g
• Accompanied by specific abilities for differing
  mental tasks

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Thurstones 7 Primary Mental Abilities

• Verbal comprehension
• Verbal fluency
• Inductive reasoning
• Spatial visualization
• Number
• Memory
• Perceptual speed

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Guilford

• SOI Model
• Structure of Intelligence
• Each cube represents an intersection of
  operations, products and contents to create 150
  components of intelligence

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Cattells Fluid and Crystallized Intelligence

• Fluid intelligence
• Ability to reason and use information
• Peaks approximately at age 20
• Crystallized intelligence
• Acquired skill and learned knowledge
• Continues to increase into old age

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Carrolls Three-Strata Model
Stratum III General
g
Stratum II Broad abilities
fluid
Auditory perception
retrieval
Cognitive speed
crystalized
Processing speed
memory
Visual perception
Stratum I Narrow abilities
Listening
Perceptual speed
Word fluency
Word recognition
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Historical Trends Intelligence

• In the past, focus was on the product, identify
  aptitudes, measure, and create models based on
  data
• During 1960s 1970s conceptualization changed
  to what are the processes involved?
• Information processing models focus on the
  processes that are involved in intelligence

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Information Processing Intelligence

• Inspection time
• How long a stimuli has to be viewed before an
  accurate judgment can be made
• How quickly a person gives their answer is
  irrelevant, participants are encouraged to take
  their time

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Inspection Time Demonstration

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Inspection Time and IQ

• Nettlebeck Lally (1976)
• First to note the relationship
• Nettlebeck (1987)
• Inspection time accounts for 25 of IQ variance
  (r -.5)
• The higher the IQ, the less stimulus time needed
  to accurately inspect the stimuli
• Big issue now is direction of causation between
  the two variables

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Intelligence and Other Processes

• The speed at which we process thought can explain
  why one individual is more intelligent than
  another
• Choice Reaction Time
• Jensen
• Lexical Access Speed
• Hunt
• Speed of word retrieval

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Working Memory Intelligence

• Being able to store and manipulate information in
  working memory is related to level of
  intelligence

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Componential Analysis

• This approach involves identifying the steps in
  complex information-processing tasks and seeing
  how each process contributes to the decision
• Sternbergs componential analysis on solving
  analogies
• Red Stop Green ____
• Graceful Clumsy late _____
• Encode - Identify each term of the problem
• Inference - Discover rule between 1st two terms
• Mapping - Map rule to second set of terms
• Application - Apply relationship and generate
  final term

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Sternbergs Findings

• Measured amount reaction time for each step
• Found more intelligent participants took longer
  to encode, but less time to complete the
  remaining steps
• Global versus local planning

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Contextualist View of Intelligence

• Culture and definition of intelligence are
  intertwined
• Differs from one culture to another
• Critical in one culture may be unimportant in
  another culture
• Measurement of intelligence will be influenced by
  culture

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Culture Differences

• Western cultures view intelligence as a means for
  individuals to devise categories and to engage in
  rational debate
• Eastern cultures see it as a way for members of a
  community to recognize contradiction and
  complexity and to play their social roles
  successfully

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Evidence Supporting Cultural Influences

• Italian Americans IQ study
• First generation median 87
• Ceci (1996) Italian Americans scores were
  slightly above average (above 100)
• Cultural assimilation is the explanation

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Gardners Multiple Intelligences

• Eight types of abilities that are independent of
  one another
• Visual / Spatial Intelligence
• Musical Intelligence
• Verbal Intelligence
• Logical/Mathematical Intelligence
• Interpersonal Intelligence
• Intrapersonal Intelligence
• Bodily / Kinesthetic Intelligence
• Naturalist Intelligence

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Gardners Theory

• Is modular, each type is independent of another
• Allows for existence of savants

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Sternbergs Triarchic Theory

• Emphasizes how 3 types of abilities work together
  to create intelligent behavior

Triarchic Theory
Analytical Compare, Evaluate Analyze
Creative Insights, Synthesis, Adapting in
unique situations
Practical Dealing with Everyday tasks Relating
to world
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Sternbergs Triarchic Theory

• Intelligence involves not merely adapting to
  ones environment but in some cases modifying
  the environment or selecting another
• Intelligences are developing abilities not fixed
  characteristics of an individual Traditional
  definitions conceptualize intelligence to remain
  essentially constant throughout an adult life
• Intelligence means adapting using your strengths
  and improving or compensating for your weaknesses