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.