Decision Making - Method and Theory in Cognition - Lecture Slides, Slides of Cognitive Psychology

Download Decision Making - Method and Theory in Cognition - Lecture Slides and more Slides Cognitive Psychology in PDF only on Docsity! Decision Making • Decision making is an important area within cognitive psychology, because of the applied interest: everyone would like to make better decisions, including armies, corporations, and individuals. • So, how is the science doing? Do we have a good understanding of human decision making? Not really… Docsity.com The basic problem in decision making •The basic problem is that DM involves choice among alternatives. This is only possible if a. You know what the alternatives are b. You know what value each has c. Those values are expressed in a form which allows comparison Docsity.com Expected utility models • Problem: humans do not make their choices on the basis of expected value. • Solution: Expected utility – essentially, “how much is it worth to you?” • Problem: there’s no way to specify this in advance. It’s subjective. Docsity.com Some more recent alternative views • Some psychologists have argued that we don’t, in fact, make many decisions. Rather, they say, humans behaviour is automatic (e.g., Bargh & Chartrand, 1999), or rule-guided (e.g., Anderson’s production rule system in his ACT model). • Loewenstein (2001) summarized arguments against the idea that humans make decisions. Docsity.com Problems with decision making theory • Loewenstein (2001) • Decision making would require too much capacity. Few decisions result from analysis and comparison of options. • Few alternatives in everyday life can be analyzed in terms of “attributes” useful in decision making. • Computers are good at computing. Humans are good at pattern-matching, categorizing. Docsity.com Decision making occurs when you have several alternatives and you choose among them. There are two characteristics of good decision making: 1. You make the best (most valuable) choice. 2. You are consistent in the choice you make in a given situation. Decision making - definition Docsity.com Decision making – how well do we do it? The best choice: There are two reasons humans do not always make the best choice: A. We don't always pick the outcome with the highest value. B. We don't always evaluate all possible outcomes before choosing. Docsity.com Picking the outcome with the highest value Economists offer several schemes for measuring value. The most famous is the theory of expected value. E.V. = outcome measured in dollars X probability Thus a 1/10th chance of winning $200 is worth 1/10 X $200 = $20 Docsity.com 2 differences between objective & subjective value 2. Subjective value is not symmetric for gains and losses (losses are more important). Kahneman & Tversky (1984) A. You flip a coin. Heads - win $20. Tails - pay $20. B. You do not flip a coin. You win nothing. Most people chose B. Docsity.com How can we have a science of value? Expected value theory is informative but doesn't work. Expected utility theory works but is not informative. Subjective value is impossible to predict. So the first problem with making the best choice is that we can’t objectively measure value. At least, not as individuals – but there are markets… Docsity.com The second problem with making the best choice Humans often do not consider all possible outcomes because doing so would take too long. • An HR person at a big company hires a new employee. She has 500 applications. Each takes 10 minutes to review. 500 X 10 = 5000 minutes = 80 hours and 20 minutes of work. She has 6 hours for the task. What should she do? Docsity.com Important heuristics in decision making 1. Availability – judgment that the more easily an event comes to mind, the more likely it is. Often works - e.g., when was the last time you met a professor who liked to be yelled at? Sometimes doesn’t work – as in cases of illusory correlation. Docsity.com Illusory correlations IC is found in cases of rare events that happen to co- occur. • E.g., sports announcer says "X hasn't dropped the ball for 100 plays," and X drops the ball on the next play. •You only notice this when the rare, newsworthy event happens - not when X doesn't then drop the ball. Docsity.com Representativeness heuristic 2. Representativeness - an event considered typical of a large class of events will be considered more probable than an atypical event. Tversky & Kahneman (1983): • Linda is 31 years old, single, outspoken and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations Docsity.com