Presentation on theme: "4/1/2017 Outline Study Question."— Presentation transcript:
14/1/2017 Outline Study Question. DecisionsThe representativeness heuristicThe availability heuristicAnchoring and adjustmentThe simulation heuristicUndoing and hindsight biasesLimited domain knowledgeProcessing resourcesThe Framing EffectLimitations in reasoningNaïve PhysicsLimitations in resourcesStudy Question.• Compare and contrast the representativeness and the availability heuristics.• Describe the framing effect. What is loss aversion? When do we tend to become risk takers when maker decisions?
2Decisions Algorithms and Heuristics Reasoning under uncertainty: Inductive reasoningAlgorithms: A specific rule or solution procedure that is guaranteed to furnish the correct answer if it is followed.E.g., finding a forgotten phone numberHeuristics: A strategy or approach that works under some circumstances, but is not guaranteed to produce the correct answer.Kahneman and Tversky’s workBehavioural decision workUps and downs of heuristicsCf. Visual illusions
3Decisions Algorithms and Heuristics The representiveness heuristic E.g., Flip a coin 6 times, which is more likelyHHHHHH or HHTHTTWhich lottery ticket is most likely to win the next 6-49?orThe representativeness heuristic - samples are like the populations that they are pulled from.The representativeness heuristic leads to a number of decision biases
4Decisions The representiveness heuristic The law of small numbers Who is more likely to have days where more than 60% of the births are male? St. Martha’s or the IWK?Ignoring base ratesJohn: Truck driver or classics professor at Dalhousie?The Gambler’s fallacyThe hot hand in basketball
5Decisions The Representativeness Heuristic, revisited The birthday bet If you bet against the birthday bet, what is P(winning)?Person 2 -> 364/365 = .99Person 3 cannot have the same birthday as 1 or 2& Person 2 cannot have the same birthday as 1Multiplicative Rule: The joint probability of two independent events is the product of their individual probabilitiesPerson 3 -> 363/365 X .99 = .99Person 4 -> 362/365 X .99 = .98Person 5 -> 361/365 X .98 = .97Person 6 -> 360/365 X .97 = .95
6Decisions The Representativeness Heuristic, revisited The birthday bet Person 10 -> 356/365 X .90 = .88Person 15 -> 351/365 X .77 = .75Person 20 -> 346/365 X .62 = .59Person 25 -> 341/365 X .46 = .43Person 30 -> 336/365 X .32 = .29Person 35 -> 331/365 X .21 = .19Person 40 -> 326/365 X .12 = .11Person 45 -> 321/365 X .07 = .06Person 50 -> 316/365 X .03 = .03
7Decisions The Availability Heuristic Our estimates of how often things occurs or are influenced by the ease with which relevent examples can be rememberThis leads to a number of biasesE.g. Listen to this list of namesE.g., Answer the following:1) Which is a more likely cause of death in the United States: being killed by falling airplane parts or being killed by a shark?In the United States, the chance of dying from falling airplane parts is 30 times greater than dying from a shark attack.2) Do more Americans die from a) homicide and car accidents, or b) diabetes and stomach cancer?More Americans die from diabetes and stomach cancer than from homicide and car accidents, by a ratio of nearly 2:1.3) Which claims more lives in the United States: lightning or tornadoes?Lightning
8Decisions The Availability Heuristic Important factors Vividness and SaliencyE.g., the full moonRepetition effectsAnything that makes recollection easierRole of the media
9Decisions The simulation heuristic Counterfactual thinking Forecasting how some event might have turned out under another set of circumstancesE.g., Mr. Tees and Mr. CraneE.g.,Medvec et al. (1995)Examined tapes of 41 athletes from ‘92 GamesJudges rated athletes on scales from “agony” to “ecstasy”Bronze medalists happier than silver medalistsCounterfactual thinkingUndoing heuristic
10Decisions The hindsight bias Anchoring and adjustment I-knew-it-all-along phenomenonAnchoring and adjustmentDetermine the following:8 X 7 X 6 X 5 X 4 X 3 X 2 X 11 X 2 X 3 X 4 X 5 X 6 X 7 X 8Kahneman and Tversky found1) 2.2502) 512(Actually: 10,320)
11DecisionsA large city is on the verge of a rare asian bird flu outbreak and it is expected that 600 people will be infected. Two alternative programs have been proposed to fight the disease. Assume that these are the exact scientific estimates of the two programs:If Program A is adopted, 200 people will be saved.If Program B is adopted, there is a one-third possibility that 600 people will be saved, and a two-thirds probability that no people will be saved.Which program would you favour?
12Decisions The framing effect (Kahneman & Tversky) The wording of question in conjunction with the background context can influence the decision.Both of the previous plans were rejected, consider the following:If Plan C is adopted, 400 people will die.If Plan D is adopted, there is one-third probability that nobody will die, and a two-thirds probability that 600 people die.Kahneman & Tversky’s resultsPlan A1/3 SavedPlan BP=1/3 SavedPlan C2/3 DiePlan DP=2/3 Die72%28 %22%78 %
13Decisions The framing effect (Kahneman & Tversky) Risk seeking and avoidanceWhen questions are framed in terms of gains we avoid risk (Prefer A over B)When framed in terms of losses we are risk-seekers (Prefer D over C)Other findings relating to the Framing EffectIt is unrelated to statistical sophisticationIt is not eliminated when the contradiction is pointed out
14Decisions The framing effect (Kahneman & Tversky) You buy an advance ticket for $ 20 to see the Harlem Globetrotters play at the Oland Centre. When you get to the game, you discover that you have lost your ticket. Do you shell out $ 20 for another?The Framing effect has been demonstrated in a number of contexts:VaccinationsTreating lung cancerGenetic counselingGambling choicesBuying refridgerators
15Decisions The framing effect (Kahneman & Tversky) You go to the Oland Centre to see the Harlem Globetrotters play. Tickets cost $20. When you get to the ticket booth, you discover that you have lost twenty bucks. Do you buy a ticket anyway?T & K’s results (theatre ticket for $10)Lose ticket -: 46 % buy another ticketLose $ % buy another ticketThe framing effect works for background information as well wording
16Decisions The framing effect (Kahneman & Tversky) Implications for the legal systemYou are to decide an only-child sole-custody case.Parent AAverage incomeAverage healthAverage working hoursReasonable report with the childRelatively stable social lifeParent BAbove average incomeVery close relationship with childExtremely active social lifeLots of work-related travelMinor health problemsTo whom do you award sole custody?-> 64 % Chose Parent BTo whom would you deny sole custody?-> 55 % Chose Parent B.
17Decisions The framing effect (Kahneman & Tversky) You have decided to leave your current job, because it is an 80 min commute each way even though you like the pleasant social interaction with your co-workers. You have two options for a new jobJob A Limited contact with others; 20 min commuteJob B Moderately social; 60 min commuteLoss aversionWe are far more sensitive to losses than to gainsK & T: Receive $ 20 for a heads, pay $ 10 for a tails:
18Decisions The framing effect (Kahneman & Tversky) You have decided to leave your current job, because it leaves you isolated from your co-workers even though you like the 10 min commute in each direction. You have two options for a new jobJob A Limited contact with others; 20 min commuteJob B Moderately social; 60 min commuteLoss aversionScenario (1) - 67 % chose Job BScenario (2) - 70 % chose Job A
19Decisions The framing effect (Kahneman & Tversky) Some weeks ago, you saw an add in the newspaper for a reduced rate for a week-end at a nearby resort. You sent in a $ 100 nonrefundable deposit. When the weekend arrives you set off with your partner. Both of you are extremely tired and somewhat ill and about half way to the resort you both realize that you would probably have a more pleasurable weekend at home.Do you turn back?The sunk-cost effect: A tendency toward taking extravagant steps to ensure that a previous expense was “not in vain”.
20Decisions Limitations in reasoning Limited domain knowledge Our cognitive representation of the situation (AKA mental model) often has incomplete information.Thermostats do not work like water faucetsHitting the elevator button 5 times is not faster than hitting it once20° C is not twice as warm as 10 °CQuasi-magical behaviour
21Decisions Limitations in reasoning Limited domain knowledge Our cognitive representation of the situation (AKA mental model) often has incomplete information.
22Decisions Limitations in reasoning Naïve Physics and Mental Models (McCloskey et al.)
23DecisionsLimitations in reasoningResults (A & B)
25Decisions Limitations in reasoning Domain of knowledge Our domain of knowledge concerning physics is poor.Impetus theory: a pre-Newtonian and incorrect concept concerning “curvature momentum”Linda is 31 years old, single outspoken, and very bright. She majored in philosophy. As a student she was deeply concerned with the issues of discrimination and social justice, and also participated in anti-globalization demonstrations.Rank the following in terms of their likelihood of describing LindaLinda is a teacher at a local elementary schoolLinda is a bank teller and is active in the feminist movementLinda is an insurance agentLinda is psychiatric social workerLinda is a bank teller
26Decisions Limitations in reasoning Conjunction fallacy: Judging the probability of a conjunction to be greater than the probability of a constituent event.Representativeness heuristicVery Unlikely64Very LikelyLikelihood ratio53StatiscallyNaiveIntermediateStatisticallySophisticated
27Decisions Limitations in reasoning Limitations in processing resources Waltz et al.Tested temporal lobe injured, prefrontal lobe injured, and normalsTwo testsTransitiveiInference problemsE.g., John is taller than Sam; Sam is taller than Tim (2 propositions)Raven Standard Progressive Matrices test
28Decisions Limitations in reasoning Limitations in processing resources Waltz et al.Transitive inferenceRaven’s MatricesDashed = ControlsDotted = Temporal lobeSolid = Prefrontal lobe
29Problems for upcoming lecture • Complete the following Sequence:O, T, T, F, F, S, S, E, N, ….• A Buddhist Monk leaves for a retreat atop a nearby mountain. He leaves at 6:00 AM and follows the only path that leads up the mountain. He travels quickly some of the way, he travels slowly, he stops for breaks. He arrives at the top of the mountain at 6:00 PM. The next morning, at 6:00 AM, he descends the mountain, again travelling at varying paces and with breaks. He arrives at 6:00 PMIs there a point on the trail that the monk would have passed at exactly the same time of day on the way up and on the way down the trail?• Three hobbits and three orcs need to cross a river. There is only one boat, and it can only hold two creatures at a time. This presents a problem: Orcs are vicious and whenever there are more orcs than hobbits they immediately attack and eat the hobbits. Thus, you can never let orcs outnumber hobbits on either side of the river.Can you schedule a series of crossing that will get everyone safely across the river?
30Problems for upcoming lecture • Connect these nine dots with four connected straight lines.• Three people play a card game. Each player has money in front of them (their ante). One each hand of this game, one player loses and the other two players win. The rules state that the loser must use the money in front of them to double the amount of money in front of each of the other two players. They stake their antes and play three hands. Each of them loses once and no one goes bust. The each finish with $8.00. What were the original antes (Hint: it is not $2 each).• A landscaper has been instructed to plant four new trees such that each one is exactly the same distance away from each of the other trees. Is this possible?