Reasoning and decision making - Wofford College

Reasoning and decision making

Reasoning

Conclusions beyond info provided

Deductive reasoning

Inductive reasoning

Decision making

Make choices

Psychology research question?

Do people think logically?

How well can people evaluate problems?

How do we represent information?

What are the biases in reasoning?

Decision making

Utility approach

If have all information, will choose most desirable outcome

Complicated what is valuable:

Not all pieces can be calculated

Potential for inaccurate mental simulations

Poor at predicting emotional reactions

Reasoning and decision making

Heuristics Bias

Representativeness heuristic

Availability heuristic

Anchoring and adjustment

Framing effect

Confirmation bias

Reasoning problem

A nearby town is served by 2 hospitals. About 45 babies are born each day in the larger hospital. About 15 babies are born each day in the smaller hospital. Approximately 50% of all babies are boys. However, the exact percentage of babies who are boys will vary from day to day. Some days it may be higher than 50%, some days lower. For a period of 1 year, both the larger and smaller hospital recorded the number of days on which more than 60% of babies born were boys. Which hospital do you think recorded more such days?

- Larger hospital

- Smaller hospital

- About the same (within 5% of each other)

Representativeness heuristic

Which outcome is more likely?

THHTHT or HHHTTT

THHTHT judged as representative of “random”

Judgment of similarity to general category

Small-sample fallacy

Hospital problem: 56% say same

Ignore law of large numbers

Descriptions change reasoning

Base-rate fallacy

Ignore statistics, decision based on descriptive information

Linda…

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 she also participated in anti-nuclear demonstrations.

Rank the following options in terms of the probability of their describing Linda. Give a rank of 1 to the most likely option and 8 to the least likely.

Linda is a teacher at an elementary school.

Linda works in a bookstore and takes yoga.

Linda is active in the feminist movement.

Linda is a psychiatric social worker.

Linda is a member of the league of women voters.

Linda is a bank teller.

Linda is an insurance salesperson.

Linda is a bank teller and active in the feminist movement.

Conjunction fallacy

Tversky & Kahneman (1983)

Most thought teller and feminist more likely

Mathematically less likely – conjunction

Seems more appealing even though statistically less likely

0

1

2

3

4

5

Naïve Intermed Sophisticated

Bank teller

Bank teller andfeminist

Availability heuristic

Are there more words that have K in the 1st position or 3rd?

“What is more likely…” (e.g. diseases)

Availability heuristic How easily examples come to mind

Generally correct, but can lead to errors

Factors that influence: Recency, Familiarity, Knowledge

McKelvie (1997): list of m/f names 12 famous m v. 14 f: 77% report more males in list

Decision making

Imagine that the US is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two programs have been proposed.

A: 200 people will be saved

B: 1/3 probability that 600 will be saved, but 2/3 probability that no one will be saved

Which program do you favor?

Decision making

Imagine that the US is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people.

What if 2 different programs are proposed

Opt. C: 400 people will die

Opt D: 1/3 probability that nobody will die and 2/3 probability that 600 will die

Which program do you favor?

Framing effect

Subtle changes in wording can change interpretation/decision

Tversky & Kahneman (1981) A vs. B: focus on lives “saved”

72% chose A: “risk averse”

But, if asked choose between C: 400 people will die

D: 1/3 probability that nobody will die and 2/3 probability that 600 will die

22% chose C: “risk taking”

Identical deep structures (A/B vs. C/D)

Depends on how question is “framed”

CogLab: Decision making

F’10 data: Problem 1

Imagine the country is preparing for the outbreak of an unusual disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Set 1:

Choice A: If program A is adopted, 200 people will be saved. Choice B: If program B is adopted, there is 1/3 probability that 600 people will be saved and 2/3 probability that no one will be saved. 83% choice A; 17% choice B

Set 2: If program A is adopted, 400 people will die. If program B is adopted, there is 1/3 probability that nobody will die, and a 2/3 probability that 600 people will die. 33% choice A; 66% choice B



Set 1: Consider the following 2-stage game. In the 1st stage there is a 75% chance to end the game without winning anything and a 25% chance to move into the 2nd stage. If you reach the 2nd stage you have a choice between the following options. Your choice must be made before the game begins. Choice A: A sure win of $30 Choice B: An 80% chance to win $45 83% Choice A; 17% Choice B

Set 2: Which of the following do you prefer? Choice A: A 25% chance to win $30 Choice B: A 20% chance to win $45 66% Choice A; 33% Choice B



Set 1: Imagine that you are about to purchase a jacket for $250 and a calculator for $30. The calculator salesman informs you that the calculator you wish to buy is on sale for $20 at the other branch of the store, located 20min away. Would you make the trip? Choice A: Yes; Choice B: No 17% Choice A; 83% Choice B

Set 2: Imagine that you are about to purchase a jacket for $30 and a calculator for $250. The calculator you wish to buy is on sale for $240 at the other branch of the store, located 20min away. Would you make the trip? Choice A: Yes; Choice B: No 33% Choice A; 66% Choice B



Imagine that you have decided to see a play and paid admission price of the $20 ticket. As you enter the theater,

Set 1: you discover that you have lost it. Would you pay $20 for another ticket?

Choice A: Yes; Choice B: No

33% Choice A; 66% Choice B

Set 2: you discover that you have lost a $20 bill. Would you still pay $20 for a ticket to the play?





Set 1: Would you accept a gamble that offers a 10% chance to win $95 and a 90% chance to lose $5?



Set 2: Would you pay $5 to participate in a lottery that offers a 10% chance to win $100 and a 90% chance to win nothing?



Kahneman & Tversky (1984)

Would you accept a gamble that offers a 10% chance to win $95 and a 90% chance to lose $5?

Would you pay $5 to participate in a lottery that offers a 10% chance to win $100 and a 90% chance to win nothing?

41% gave different preferences Even though $5 is loss of gamble vs cost to play

32% said ‘no’ to 1st offer, but ‘yes’ to 2nd


Choose between

A sure gain of $240

25% chance to gain $1000 and 75% chance to gain nothing

Choose between

A sure loss of $750

75% chance to loose $1000 and 25% chance to lose nothing


Choose between

A sure gain of $240

25% chance to gain $1000 and 75% chance to gain nothing

Choose between

A sure loss of $750

75% chance to loose $1000 and 25% chance to lose nothing

84% (risk-averse)

16%

13%

87% (risk-seeking)

Framing: medical decisions

McNeil et al (1982) Hospital physicians asked which form of treatment for patient with lung cancer (surgical or 6wk radiation) IV: prior information (framing)

“Of 100 people having surgery, 10 will die during treatment, 32 will have died by 1yr, and 66 will have died by 5yrs. Of 100 people having radiation therapy, none will die during treatment, 23 will have died by 1yr, and 78 will have died by 5yrs.” “Of 100 people having surgery, 90 will be alive immediately after treatment, 68 will be alive after 1yr, and 34 will be alive after 5yrs. Of 100 people having radiation therapy, all will be alive after treatment, 77 will be alive after 1yr, and 22 will be alive after 5yrs.

Results: Framed in terms of dying: 44% choose radiation Framed in terms of living: 18% choose radiation

CogLab: Risky decisions

Sp ‘12

Problems

Get some additional money or lose money

Choices

Risky (probability) vs riskless choice

Hyp

When choices are gains: risk-avoiding

When choices are losses: risk seeking

Expected: % smaller for gain vs loss problems

Results: % risky choice selected

Gain: 48.5% (46% global)

Loss: 12.1% (41% global)

Tversky & Shafir (1992)

Imagine you have just taken a tough exam. It is the end of the semester, you feel tired and you find out that you

Passed the exam Failed the exam and you will have to take it again in a couple of months Won’t know the outcome of the exam for 2 more days

You now have the opportunity to buy a 5-day vacation to Hawaii at a very low price. It expires tomorrow. Would you:

Buy the vacation package? Not buy the vacation package? Pay a $5 nonrefundable fee in order to retain the right to buy the vacation at the same price the day after tomorrow?

Tversky & Shafir (1992)

Pass/fail doesn’t change % of decisions

Each individual needs to have reason for decision!

Justification process

Anchoring and adjustment

Anchor: begin with first approximation

Adjustment: changes based on added info

Multiplication problem: 5s respond

A: 8x7x6x5x4x3x2x1

B: 1x2x3x4x5x6x7x8

A grp median: 2,250

B grp median: 512

Correct answer: 40,320

Real world application

First impressions

Others?

Confirmation bias

Tendency to only gather support; ignore disconfirming evidence

Wason (1960) card task

You will be given 3 #s which conform to a simple rule. Your aim is to discover this rule. Write down #s and reasons and I’ll tell you if they conform to the rule or not.

Results: Few participants who after they were correct tried to disconfirm their hypothesis.

Lord et al. (1979)

How convincing an article is depends on prior attitude

Kuhn’s “Structure of a Scientific Revolution”

Reasoning: Bias

Framing Way alternatives are structured Consequences are the same Affects representation

Representativeness heuristic Decision based on comparison to ideal Don’t consider statistics

Availability heuristic Tendency to use answer that easily comes to mind

Anchoring and adjustment Influenced by starting point of problem

Confirmation bias Tendency to seek/use info that supports belief Belief persistence

Neuroeconomics

Economic decision making problems Examine influence of emotion (and mood) on decisions

Expected emotions (predicted) Immediate emotions: integral vs incidental Emotion determines risk aversion (impact of loss greater than gain)

Sanfey et al (2003) Ultimatum game (how to split $) IV: human vs computer partner Result: humans reject low offers b/c “unfair” Brain activity: Anterior insula activation when rejected offer

Lerner et al (2004) View film (sad, disgust, neutral) Decision conditions:

Sell: Set price to sell product Choice: price willing to choose product instead of accepting $

Result: sad/disgust grps set price lower

Neuroscience of thinking

Major area involved: prefrontal cortex (PFC)

Damage to PFC has effect on:

Planning and perseveration

Problem solving

Understanding stories

Reasoning

Application: teenagers

Why are we imperfect?

Why use heuristics?

Less effort, less to remember Economical

Faster to answer

Usually correct Effective

Reduce errors Approximation

Examples/Problems purposefully created to create “errors”

Help us understand cognitive process

Documents

Reasoning and decision making - Wofford College