Overall Summary of Judgement and Decision Making!

For our final piece of coursework for judgement and decision making we had to do a group presentation. Our group chose to do Utility and the three of us looked at different articles. Mine was on dissecting the risky choice framing effect by Peters and Levin (2008). This article looked at the 5 Variants Asian choice disease, first proposed by Kahneman and Tversky (1981) which was an early example of the malleability of human decision making. The main point of the article was to look at the differences framing has on the highly numerate participant’s and the less numerate participant’s. Overall the less numerate showed a greater susceptibility to the framing.  During the presentation I had to analyse and summarise this article. For me I have found judgement and decision making to be very interesting yet challenging. The reasons why people make different judgements and decisions based on cognitive processes. Are they risk adverse or risk seeking? Why do people make certain decisions? What variables affect decisions? For me personally I think that there are many individual factors in making decisions, such as what the consequence of that decision will be. One must keep in mind that most decisions are made unconsciously. Jim Nightingale, Author of Think Smart-Act Smart, states that "we simply decide without thinking much about the decision process."  There were therefore many aspects of decision making that I found interesting such as probability and utility theory, and the way in which a choice is framed affects an individual’s decision.  From judgment and decision making I have learnt that my intuition when it comes to making my own decisions (especially in probability) are quite inaccurate. However I have also learnt that I am not risk seeking.

Overall Judgment and decision making has opened my eyes about the way in which I make decisions and has made me more aware of the individual factors that affect individual’s decisions. There are so many numerous psychological factors and events within decision making, including moral intuitions and performance, intuitive and heuristic modes of evaluating and choosing, conscious reasoning modeled after Western logic, and the factors and biases that affect one's choice of choosing method and the performance of the method itself. As with all mental processes, within this general topic are the cognitive and biological factors that control the uses of the various psychological processes in regards to decisions.

Overall Summary of Article!

Dissecting the Risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options. Peters and Levin (2008)

This article using the variants of the Asian Disease Problem tried to dissect the risky-choice framing effect. This demonstrated the way in which choices in decision making are advertised, based on whether they are positively or negatively framed. Whereby the participants had to provide preference ratings for the full decision problem and provide attractiveness ratings for each of the component parts i.e the sure-thing option and the risky option. Overall findings showed that the risky choices were made by participants choosing the negatively framed versions. During this article it looked at participants with differences in their numerate levels. Some were highly numerate and some had low numeracy. The results showed that the less numerate had a large effect of frame above and beyond their options, whereas the high numerate were almost completely accounted for by their attractiveness ratings.

Numeracy refers to the ability to understand and use mathematical and probabilistic concepts. In the US approximately half the population has difficultly with simple numeric tasks. Therefore it is not surprising that greater ability with numbers leads to more comprehension of numeric information in important decisions.

Peters et al (2006) Found that high numerate participants being more likely to retrieve and use appropriate numerical principles. And transform numbers in one frame to another.

There were 4 hypothesis is this article, but the main one was to replicate the Risky-choice Framing effect and that the risky choice rather than the sure-thing option will be preferred. Which ultimately it was found in the results.

During the task the participants were assigned to a positive or negative frame. There was a full scenario task and the participants had to rate the attractiveness of the Sure thing and Risky choice option. They were then asked to fill out a demographic from which aimed to discover whether they were highly or less numerate.

It was found that because the less numerate are less able to translate, therefore their results will be less reliable. Although the less numerate showed a larger framing effect. Alternatively the highly numerate understood the choices and numbers more effectively, therefore made more accurate and complex decisions.

Overall this shows that people who have greater numerate skills are able to integrate complex numerical information in the construction of their preferences as they have a greater working-memory capacity. Therefore there are individual factors in weighting risky and riskless options.

Article Notes for presentation!

Dissecting the Risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options!

Peters and Levin (2008)

Introduction

This journal using the variants of the Asian Disease Problem tried to dissect the risky-choice framing effect. This demonstrated the way in which choices in decision making are advertised, based on whether they are positively or negatively framed. Whereby the participants had to provide preference ratings for the full decision problem and provide attractiveness ratings for each of the component parts i.e the sure-thing option and the risky option.

Numeracy moderates framing effects:

Numeracy refers to the ability to understand and use mathematical and probabilistic concepts. In the US approximately half the population has difficultly with simple numeric tasks. Therefore it is not surprising that greater ability with numbers leads to more comprehension of numeric information in important decisions. Statistics showed (national adult literacy survey) that half the general U.S population has difficultly with simple numeric tasks. Although these individuals may not perceive themselves as ‘at risk’ in their lives due to limited skills, research suggests that that having inadequate numeric skills is associated with lower comprehension and use of numeric information in health and financial domains. Therefore it is not surprising that greater ability with numbers leads to more comprehension of numeric information in important decisions. This shows that Numeracy relates in somewhat less intuitive ways to a variety of cognitive and affective biases.

Peters et al (2006)

Numeracy’s effects on framing of a single attribute by presenting participants with the exam scores of 5 psychology students and asking them to rate the performance of each student on a 7- point scale from -3 (very poor\0, to +3 (very good). The framing of the exam scores were manipulated as either percent correct or percent incorrect. 74% correct vs. 26% Incorrect.

From this it was found that high numerate participants being more likely to retrieve and use appropriate numerical principles. And transform numbers in one frame to another. The highly numerate appeared to integrate more sources of information then the less numerate. Alternatively, in prior studies of numeracy, highly numerate individuals have demonstrated deeper processing of numeric information by showing smaller framing effects.

Vs Garcia (2006)

Garcia examined the risky-choice paradigm, and found no effect of numeracy’s influence on attribute framing. Therefore because of this it is curious that numeracy did not influence risky-choice framing effects in s similar manner with greater effects of the provided frame on the less numerate.

Example

The Sure thing option offers a fixed (riskless) outcome. In the Positive framing condition it is ‘save 200 (out of 600) lives’ whereas in the Negative condition it is ‘400 will die’. The Risky option offers a ‘one-third chance that no one will die and a two-thirds chance that all will die’ in the Negative condition.

Experiment

During the task the participants were assigned to a positive or negative frame. Where they have to provide preference ratings for the full decision problem, and also to provide attractiveness ratings for each of the component part i.e the sure-thing option and the risky-choice option.

They were then asked to fill out a demographic from which aimed to discover whether they were highly or less numerate.

Results

It was found that because the less numerate are less able to translate, therefore their results will be less reliable. Although the less numerate showed a larger framing effect. Alternatively the highly numerate understood the choices and numbers more effectively, therefore made more accurate and complex decisions.

Discussion

Overall findings showed that the risky choices were made by participants choosing the negatively framed versions. During this article it looked at participants with differences in their numerate levels. Some were highly numerate and some had low numeracy. The results showed that the less numerate had a large effect of frame above and beyond their options, whereas the high numerate were almost completely accounted for by their attractiveness ratings.

Therefore ultimately this shows that people who have greater numerate skills are able to integrate complex numerical information in the construction of their preferences as they have a greater working-memory capacity. Therefore there are individual factors in weighting risky and riskless options.

Co-operation and Co-ordination!!

This week we were introduced to the idea of Game Theory where this is about probabilities and outcomes, but mainly about interactive decisions/judgements. It is trying to work out what sort of strategies people arrive at. This is where the Nash Equilibrium and the prisoner’s dilemma came into play.

The Nash Equilibrium was derived by John Nash and suggested that we as people are self-interested and in the prison dilemma. Looking at the example of the Nash Equilibrium got me to thinking, would I rat out my spouse for a smaller sentence? Therefore the Nash equilibrium is a combination of strategies that cannot be improved upon.

Another example of co-ordination in regards to people’s actions was the example where to people have met and decided to go for coffee, however both cannot remember where it was they were supposed to meet. In reality there are places even without discussing things people gravitate towards. These are called shelling points. These are places that are intuitively obvious, so therefore people tend to gravitate towards.

Another topic in class we looked at was that of competitiveness amongst people. Are we born with it, or do we learn it? It is my belief that we are born with in. In evolutionary terms animals would always compete to be the alpha male and to mate with females. However it is my belief that with humans that main reason we are so competitive is because there is such inequalities within society. How can we not compete with one another when everybody is different? If we all lived in the Amish where everyone dresses equally and nobody gets paid. And they all work together as equals to work at their community. Then there would not be any need for competitive behaviour. Although realistically we do not live in a world that is equal, therefore it will bring out people’s competitive nature.

There was an example given in class of a clip from the film ‘Rebel without a cause’. And the example was the Chicken game. Where these two boys had to drive towards a cliff and the first person to bail out of the car was the loser. It resulted with a person dying. This example showed how risk and competitiveness can be taken too far. Another such example was that of the Cuban missiles and the almost nuclear was between America and the Soviet Union. Both didn’t want to back down. However in the end the Soviets didn’t fire on the Americas and no war was started.

This shows how competitiveness and can result in drastic behaviour and unnecessary risks.  

Preferences and Decisions!!!

This week we looked at people’s preferences when making decisions. And how peoples preferences are different based on the gamble, as generally people tend to prefer the gamble with the higher probability. A theory behind this notion is Choice Intransitivity (Tversky, 1969). Choice Intransitivity has 3 dimensions, intellectual ability, emotional stability and social facility. And is the best way of choosing candidates as it violates the assumption of Utility Theory.

Lictenstein and Slovic, 1971 looked at explanations into why people are willing to pay more with the highest potential outcome. The main reason was that when people are considering these proposed gambles, they find it hard to weigh up the probabilities and outcomes, however when actual money is involved an actual outcome is expected and predicted. Looking at the way the questions are portrayed also has a factor when people make decisions, like framing as most people would go for the higher probability question. This also backed up by Prominence Hypothesis as whatever question is more prominent will affect a person’s answer.

I am not a gambler, however given the example of 7/36 chance of winning £9 and a 7/36 chance of winning £9, but a 29/36 chance of losing 50p. I would definitely choose the second choice. However it has been proven that the more items to consider the more the more analytical people are.

Overall my own personal preferences when making decisions would depend on the strategy selection determined by personal and task factors.

Rational Choice and the Framing of Decisions:

This week was based on the article by Kahneman and Tversky (1986) Rational Choice and the Framing of Decisions. Which is a modern theory of decision making under risk  and uncertainty and also shows alternative descriptions of a decision problem often give rise to different preferences, contrary to the principle of invariance that underlies the rational theory of choice. The article introduced the idea of framing which is basically the same option just presented in different ways, and how this affects and can change people’s decisions. Specifically individuals who make inconsistent choices that usually depend on whether a question is framed in a way that suggests a win or lose scenario. Within the article it also introduces Prospect theory, which describes decisions between alternatives that involve risk i.e. where the probabilities of outcomes are known. The model is descriptive , and it tries to model real-life choices, rather than optimal decisions. During the article it looked at the different outcomes of framing and how something is portrayed that will affect the outcome and a person’s decision. The article also demonstrated the 4 principles of utility theory and looked at the failures of invariance (which was one of the 4 principles of utility theory). The conclusion from this was that violations of invariance are caused by framing effects i.e survival and death. Overall I found the article portrayed a good sense of rational choice in decision making. I felt that the example for the failures of invariance on lung cancer and different examples of treatments showed an accurate idea of how it is the way in which things are portrayed that can affect people’s decisions.

Decision Making!!!!

Decision Making Under Risk and Uncertainty!

This week’s topic was on decision making under risk and uncertainty.  In class we had to find our personal point of indifference in making a decision between a choice that is certain and a choice that would be taking a risk. I always thought of myself as someone who would take risks, however I found that in class I went for the certain choice. We looked at theories and the Allais Paradox was the one I found most interesting where you have a choice between A and B. A£I,000,000 for sure or B. 10% Chance of getting £5,000,000 and 89% chance of getting £1,000,000 and 1% chance of getting £0. I chose A for certain.

I believe that decision making is evident in nearly everything we do. From the everyday to the consequential, our lives are governed from the decisions that we take. Therefore it is difficult to understand the factors about how we make decisions. When understanding decisions you need to understand and be aware of how various factors may have had an influence on past decisions, and so that we may be able to improve upon future decisions.

Because decision making is so central to our lives, it is not surprising that it receives research

attention from a wide range of disciplines: cognitive psychology, economics, political science, marketing, social psychology, engineering, philosophy, and more. I therefore have come to the conclusion that I myself tend not to take too many risks when making a decision.

Bailing and Jailing the Fast and Frugal way!!

This we in our groups we had to discuss the article ‘Bailing and Jailing the Fast and Frugal way’ Dhami and Ayton (2001). I believed that the main focus of the article was about how magistrates make decisions about whether to realise defendants on bail based on predictions on their previous crimes and whether they have re offended when out. Decisions to bail upon adjourning a case have major consequences for both defendants and society. Some of the facts from this article are that 98% of criminal cases are dealt with from start to finish by magistrates. Also that magistrate’s decide whether to make punitive or non-punitive decisions on whether a case is adjourned for subsequent trial or appeal.

The article was split into two sections the first half was on reasons that affect accuracy of judgements and the second half was about the models. Basically some of the things that can affect magistrate’s decision making is sometimes having a lack of information on the defendant which could results in an inaccurate decision. Also all magistrates decisions are also always under time pressure and are therefore pushed to rush their decisions so as to make them quickly. Rushing the decision can therefore have an impact on decision making. Another is the quality of info as magistrates do not know how useful different information is in predicting what the defendant will do when bailed. Also there are no statutory rules for the procedure for bail hearings in magistrate’s court. Looking at all these reasons made me think that magistrates can’t always make the right decision and how much this can have an impact on a person’s life. It shows me the importance of having the right information when making such an important decision.

The other half of the article identified the different process models such as the due- process model, which aims to reduce crime, whilst minimizing the number of innocent people wrongly convicted.  There was also Judgement analysis which is an ability model to describe and predict individual’s judgement data is limited by their consistency in making decisions because inconsistent individual will be hard to predict. Other models were the Conjunctive/ Disjunctive/ Former models where all cue values must pass a specific threshold before a judgement is made. Lastly were the Fast and Frugal models that are simple process models that do not search through all available info, do not integrate all relevant info and base their decision on only one cue. They are accurate and the evidence for the F& F models are as good as compensatory integration models at describing human judgements.

Overall the results from the article showed that magistrates showed inconsistency in their bail decisions and that they are influenced by defendant and crime control related cues. Looking at matching heuristics backs up compensatory models. The fast and frugal way model portrays a picture of bail decision making that conflict with the ideal practice as defined by due process model of justice. I believe that given that not all information presented to magistrates is accurate and that it is always hard to predict human behaviour, and therefore hard to predict whether a defendant will re- offend, makes decision making very complicated and often inaccurate.

Narrow norms and vague Heuristics!

This week in our groups we discussed the articles that we had to read. Our group article was ‘A Reply to Kahneman and Tversky (1996) By Gigerenzer, On Narrow Norms and Vague Heuristics’.

I think that the main goal of the article was to understand cognitive processes that produce both valid and invalid judgements.

I felt that the article was quite heated in some parts when Gigerenzer was opposing Kahneman and Tversky. This is because Kahneman and Tversky wrongly asserted that Gigerenzer simply claimed that frequency formats make all cognitive illusions disappear. Whereas, Gigerenzer proposed and tested models that actually predict when frequency judgements are valid and when they are not. The issue is not whether or not, or how often cognitive illusions disappear. The focus should be on the construction of detailed models of cognitive processes that explain when and why they disappear.

We also discussed the topic of cognitive process models which came up within the article. Information/cognitive Processing Models are frameworks used by cognitive psychologists to explain and describe mental processes. The model is similar to the thinking process to how a computer works. As just like a computer, the human mind takes in information, organizes and stores it to be retrieved at a later time.

However Gigerenzer stated though the proposed models of cognitive processes that predict when frequency and probability judgments are valid and when they are invalid according to certain norms and that also explain why.

In the conclusion of his article Gigerenzer admitted that Kahneman and Tversky’s heuristics and biases based program has had a tremendous and stimulating effect on research. But that overall we will need models that make surprising and falsifiable predictions and that reveal the mental processes that explain both valid and invalid judgment.

My personal view about the article was that I found it hard to understand by itself, however when both articles were discussed I found it easier to follow.

 I believe that Gigerenzer was trying to explain that heuristics (which are mental shortcuts that simplify problems or tasks) explain both little and too much. They explain too little because we still do not know exactly how they work and why and they explain too much because often, one heuristic can be applied to almost any experimental result. Also, he points out that there are two main obstacles to understanding heuristics. First, the norms for analyzing reasoning are often too narrow, so that when judgments change from these norms, they are wrongly labeled as “cognitive illusions.” The second is that heuristics are generally too vague to count as explanations, so basically researchers can understand the research however they wish. He then suggests that instead of heuristics that can explain everything and nothing, researchers should use strategies and models to make predictions and reveal the mental processes that explain both valid and invalid judgments (Gigerenzer 1996).

Judgement/Probability/Frequency!

This week we looked at probability, judgement and frequency and how generally people have a misconceived idea about probability and ideas towards it. First we look at the birthday probability where we were asked how many people it would take to find 2 people with the same birthday.

My first thought was 366. However the answer was just 23. This is a prime example of where people have a very misconceived idea about probability. Another example is that of the lottery. I personally have never played. I have never seen the point as I am unlikely to win, however you have to be in it to win it. The probability of winning the lottery is about 49 million to 1, yet people still always play, and with the same numbers each go. They systemize their numbers with makes the likelihood to them winning even less. The probability of the lottery is very inaccurate and most people would be better off with a lucky dip. In the case of the lottery however I think it is more that case that people try to make sense out of randomness. And this is why they often systemize their numbers

It is not however the probability of the lottery that is inaccurate, it can be newspapers as well. There was a story that suggested that there was an increased risk of cancer for people taking the pill. People then stopped taking the pill, which also had risks. This also proves that people’s intuition of probability is very poor and often inaccurate, and that there is a perceptual bias in probability judgement.

This was also proven in class when we had to do a coin toss probability test. We were asked how many times there would be a change in lead between heads and tails out of 101 tosses. I thought the answer was 25. The answer was 0. It has proven that my personal intuition for probability it quite poor. In class we were also introduced to the idea of heuristics that are shortcut ways of thinking, and found that people are more sensitive to sample size and when it comes to probability are affected by the recency, familiarity and vividness. This is what most people do when answering a probability answer; they try to make sense out the randomness. Just the like the example of weather patterns and randomness.

Overall though due to this lesson I have found that the answer that seems likely is generally not the right answer, and to always think twice before answering a probability question.

What is a good Decision! Week 1

This first week we discussed ‘What a judgement and a decision was’. My first thought was that whether a person makes a judgement and decision is a purely personal thing and consequences differ and vary with each decision.  If a judgement is an assessment, and a decision is what follows an assessment, then would the outcome be a positive or negative decision based on the judgement?

We discussed the probability of analytical thinking and whether this would affect a decision. My idea of analytical thinking is thinking very in-depth about something. Or when you are analysing a concept or idea and trying to understand all the variables before undertaking that decision. Perhaps like in an interview. I think this shows that people are more analytical when under pressure. This is what I would do when in an exam; I would weigh up the pros and cons of each question before choosing and making my decision.

As discussed in class, if a judgement is an assessment, then this has made me realise that sometimes analytical thinking in for example interviews, does not always result in good decisions. When choosing the best candidate for a job, CV’s are assessed and a person is assessed in an interview. Sometimes people interview badly but would however be good for the job on paper. And due to analytical thinking poor judgements and decisions can be made. This reminded me of my sister, who is currently at Cambridge University. She had to undergo two interview processes as well as getting the required grades. In the first interview she did poorly in and she was told that she would be put on the waiting list. This is a classic example. Her grades were impeccable. And she would be studying. Why then did they need to assess her character? I believe a number of factors can affect a person’s confidence and performance in an interview. Luckily in the second interview she did well, and is now at the University. But I believe this a prime example of what how analytical thinking can result in poor judgments and decisions.   

Another thought I had ( and which we discussed in class) was the subject of people who are mentally and physically ill and how their judgements and decisions can be affected by this. When people are mentally ill it can often impair their judgement resulting in a bad decision i.e. psychos. Also people, who are under the influence of substances like alcohol/drugs, will often make decisions they would not normally make if they were not under the influence.  

 What then does make a good decision?

A decision is a course of action we are prepared to take.  And is the concept of processes and consequences. I believe that in day to day life we make many judgements and decisions based on our own personal concepts and schemas, in the way we view the World based on our own personal experiences. However whether a decision is good I believe would mainly depend on the consequences as a result and depends on the decision in turn.