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
• 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
• Subjective Utility Theory


  • Goal is to seek pleasure and avoid pain
  • Actual judgment of pleasure and pain is made by each decision maker (subjective)
• Subjective Expected Utilities


  • Consider all possible alternatives
  • Use all information currently known
  • Weigh potential costs and benefits
  • Subjective weighing of various outcomes
  • Sound reasoning consider above factors
• Satisficing


  To obtain an outcome that is good enough
• Bounded rationality


  Humans are rational but within limits
• Elimination by Aspects


  1. Begin with a large number of options

  2. Determine the most important attribute and then select a cutoff value for that attribute

  3. All alternatives with values below that cutoff are eliminated

  4. The process continues with the most important remaining attribute(s) until only one alternative remains
• Group Decision Making


  • Can enhance decision making
  • More ideas
  • Better memory of events
• Groupthink


  Premature decision made by members trying to avoid conflict
• Symptoms of Groupthink


  • Closed-mindedness
  • Rationalization
  • Squelching of dissent
  • Formation of "mindguard"
  • Feeling invulnerable
• Heuristics Influencing Decision Making

  • Representativeness
  • Availability
  • Anchoring & adjustment
  • Overconfidence
  • Illusory correlation
  • Hindsight bias
• Representativeness Heuristic


  Judge probability of an event based on how it matches a stereotype
• Gambler's Fallacy


  Mistaken belief that a random event is affected by previous random events
• Base rate Information


  The actual probability of an event
• Much research in the 1970's &1980's seemed to indicate that base rate information in these type of problems were ignored
• When base rates are used

  • 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
• Availability Heuristic


  Making judgments about the frequency or likelihood of an event based on how easily instances come to mind
• Anchoring-and-Adjustment Heuristic


  • Begin by guessing a first approximation (an anchor)
  • Make adjustments to that number on the basis of additional information
• Illusory Correlations


  A perceived relationship that does not, in fact, exist
• Overconfidence


  People tend to have unrealistic optimism about their abilities, judgments and skills
• Hindsight Bias


  The memory of how we acted previously changes when we learn the outcome of an event
• Deductive reasoning


  Formal procedure that ensures accuracy if rules of logic are followed
• Deductive Validity


  • If P, then Q (Conditional if-then statement)
  • Statement about whether P or Q is true or not true
  • A conclusion about P or Q
• Syllogistic Reasoning


  1. Draw a conclusion based on two premises

  2. A major premise

  3. A minor premise

  4. A conclusion
• Mental Model


  • A mental model represents one possibility, capturing what is common to all the different ways in which the possibility may occur
  • Mental models represent explicitly what is true, but not what is false
• Obstacles to Deductive Reasoning

  • Overextension errors
  • Foreclosure errors
  • Confirmation bias
• Enhancing Deductive Reasoning


  • Avoid heuristics and biases that distort our reasoning
  • Consider more alternatives
  • Training and practice
  • Being sad
• Inductive Reasoning


  Involves reasoning from specific cases to more general, but uncertain, conclusions
• Method of Agreement


  John Stuart Mill's Cannons
• Method of Difference


  John Stuart Mill's Cannons
• Confirmation Bias


  Tendency to search for and interpret evidence in a way that confirms our theories and avoid evidence that contradicts prior beliefs
• Associative system


  Sloman's two complementary systems of reasoning
• Rule-based system


  Sloman's two complementary systems of reasoning