Ch11 Decision Making - Decision Making March 17th 22nd and...

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Unformatted text preview: Decision Making March 17th, 22nd, and 24th, 2016 Outline I) What is Decision Making? II) Heuristics in Decision Making • • • • • Availability Representativeness Anchoring Illusory Correlation Confirmation Bias III) Decision Making in the Brain Probability Judgments Many decisions involve uncertain events with unknown probabilities • How do we estimate probabilities? • What strategies do we use? • What information influences us? • Are we rational decision makers? Decision Making Daniel Kahneman & Amos Tversky “Amos and I shared the wonder of together owning a goose that could lay golden eggs - a joint mind that was better than our separate minds. The statistical record confirms that our joint work was superior, or at least more influential, than the work we did individually.” (Kahneman, 2002) Sources of Decision Difficulty Conflict – decision maker must make tradeoffs across different dimensions (e.g., car’s power vs. gas mileage; TV’s price and quality; spending time at work vs. with family) Uncertainty – outcome of decision often depends on uncertain variables or events (e.g., future demand for a product; completion time). Heuristics in Decision Making Availability heuristic In four pages of a novel (2000 words), how many words would you expect to find having the form: ––––ing –––––n– Heuristics in Decision Making Availability Heuristic & Risk Perception: Slovic et al. (1976) • • Influence of media coverage well-publicized risks (e.g., cancer, botulism, fire, tornado) tend to be overestimated Heuristics in Decision Making Representativeness Heuristic Of all families having exactly six children, in what percentage do you think the exact birth order of boys and girls was: (a) BBBGGG ? (b) GBBGBG ? Related to the mistaken belief in the “Law of Small Numbers” and the “Gamblers Fallacy”. Heuristics in Decision Making Anchoring Last Name A - M: 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 Last Name N - Z: 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8 Heuristics in Decision Making Illusory Correlation Seeing a relationship one expects to see even when no such relationship exists. Heuristics in Decision Making Confirmation Bias: Wason 2 - 4 - 6 2-4-6 Heuristics in Decision Making Confirmation Bias: Wason 2 - 4 - 6 Findings: • Of the 29 original participants, only 6 discovered the correct rule without first making incorrect guesses, 13 others made one wrong guess, 9 reached two or more incorrect conclusions, and 1 reached no conclusion at all (Wason, 1960). • People appear to develop a general idea of the rule, then construct examples that follow the rule. What they fail to do is to test their rule by constructing a counterexample—a triplet that, if their rule is correct, won’t receive a yes answer from the experimenter. • Confirmation bias - participants seem to be trying to confirm that their rule is true, rather than trying to test their rule. Heuristics in Decision Making Confirmation Bias: Wason Selection Task (Wason, 1966) You have been hired as a clerk. Your job is to make sure that a set of documents is marked correctly, according to the following rule: "If the document has an A on one side, then it must have a four on the other. You have been told that there are some errors in the coding of the documents, and that you need to find the errors. Each document has a letter rating on one side and a numerical code on the other. Here are four documents. Which document(s) do you need to turn over to check for errors? A D 4 7 Heuristics in Decision Making Confirmation Bias: Wason Selection Task (Wason, 1966) You have been hired as a bouncer in a bar and you must enforce the following rule: "If a person is drinking beer, then he must be over 19 years old." The cards above have information about four people in the bar. One side of each card lists a person's age and the other side shows what he or she is drinking. Which card(s) do you need to turn over to be sure no one is breaking the law? Beer Coke 22 Why is this easier? 16 Heuristics in Decision Making Confirmation Bias: Wason Selection Task (Wason, 1966) Cosmides and Tooby Cheater Detection - there is dedicated mechanism for detecting those who default on social contracts, i.e. those who deliberately take benefits without paying costs or meeting requirements Decision Making in the Split Brain Decision Making in the Split Brain Probability Guessing VP Subjects JW - 52 year old right handed male VP - 54 year old right handed female Both Patients underwent staged complete callosotomy in 1979. JW ME Decision Making in the Split Brain Probability Guessing >>> Decision Making in the Split Brain Probability Guessing Frequency matched - matched the responses to their guesses Maximized - always choose the option that has occurred the most frequently in the past. Decision Making in the Split Brain Causal Thinking A C B Wolford et al., (2000). J. Neuroscience. Corballis et al., (1999). JOCN. Dissociating Causality in the “Split” Brain Roser, Fugelsang, Corballis, Dunbar, & Gazzaniga (2005) Causal Perception + Causal Inference Dissociating Causality in the “Split” Brain Roser, Fugelsang, Corballis, Dunbar, & Gazzaniga (2005) Controls RH - 96% LH - 97% RH - 96% LH - 95% Dissociating Causality in the “Split” Brain Roser, Fugelsang, Corballis, Dunbar, & Gazzaniga (2005) Split-Brain RH - 77% LH - 52% RH - 48% LH - 82% Decision Making, Emotion, and the Brain Neuroeconomics Cognition is part of a highly interactive system involving the interplay between attention, perception, emotion, and social interactions. Decision Making, Emotion, and the Brain Sanfey, Rilling, Aronson, Nystrom, and Cohen (2003) Ultimatum Game • • • Have the opportunity to split $10 with someone. You will receive a one-time offer from your partner, and then you have the opportunity to either accept or reject this offer. If the offer is accepted, you split the money as determined, if it is rejected you both go home with nothing. What would you do if your partner offered you 5 dollars? How about if she offered you 1 dollar? 26 Decision Making, Emotion, and the Brain Sanfey, Rilling, Aronson, Nystrom, and Cohen (2003) 27 Decision Making, Emotion, and the Brain Sanfey, Rilling, Aronson, Nystrom, and Cohen (2003) Unfair Offers 28 Summary Decision Making 1. There are many heuristics and biases that we use when making decisions. We discussed five: the availability heuristic, the representativeness heuristic, anchoring, illusory correlation, and confirmation bias. 1. Research with split-brain patients has demonstrated that hypothesis formation, testing, and causal inference are housed in the left hemisphere. Causal perception is housed in the right hemisphere. 2. The field of Neuroeconomics has recently emerged as a discipline that examines how emotions and cognition jointly contribute to real life decisions. ...
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