1. INFM 718A / LBSC 705 Information For Decision Making
Lecture 13

2. Selective Perception

3. One Perspective “We do not first see, then define,
we define first and then see.”
Walter Lippmann (quoted in Plous, 1993.)

4. Selective Perception Perception is affected by expectations.
Bruner and Postman’s (1949) experiments.
What did they find?

5. Normal Cards vs. Trick Cards
Trick cards had wrong (inverse) colors, such as a black three of hearts. (Check the cover of the Plous book.)
Bruner and Postman found that it took people about four times longer to recognize the trick cards than normal cards.

6. Four Strategies to Cope
Dominance
Compromise
Disruption
Recognition

7. Dominance
These people saw a red three of hearts or a black three of spades.
In the first case form is dominant and color is fit to expectation; in the second case vice versa.
Bruner and Postman called this “Perceptual Denial.”

8. Compromise
These people reported a red six of spades as a purple six of spades (or of hearts).
A black four of hearts was reported as a greyish four of spades. A red six of clubs was reported as “six of clubs illuminated by red light.”
50% showed compromise behavior to red trick cards; 11% to black trick cards.

9. Disruption Some people had trouble forming any perception at all.
Disruption was rare but quite dramatic.

10. Recognition Some people recognized that there was a problem.
Even then, some failed to correctly identify what was wrong.

11. Expectations… … can strongly influence perceptions.
We probably knew that already. However, we saw that empirical evidence supports the hypothesis.
Can more experience with the subject topic strengthen the influence of expectation on perception?

12. How many ‘f’s in this phrase?
These functional fuses have been developed after years of scientific investigation of electric phenomena, combined with the fruit of long experience in the part of the two investigators who have come forward with them for our meetings today.

13. Experience  Expectations  Perception
The second example: estimating the number of ‘f’s in a phrase.
Non-native speakers of English perform better. (Do they?)
The initial “Why?” is not completely answered.

14. Potent Expectations Experiment by Wilson and Abrams (1977)
Heart rate was affected by whether the subject believed he was given alcohol more than whether he was actually given alcohol.
Expectations turned out to be more important than changes in blood chemistry!

15. A more sophisticated experiment…
… by McMillen, Smith and Wells-Parker (1989)
“High sensation seekers” who believed they had consumed alcohol drove more recklessly than those who believed they had not.
“Low sensation seekers” who believed they had consumed alcohol drove more cautiously than those who believed they had not.

16. Dartmouth vs. Princeton (1951)
Hastorf and Cantril (1954) concluded that “It is inaccurate and misleading to say that different people have different ‘attitudes’ concerning the same ‘thing.’ For the ‘thing’ simply is not the same for different people…”1
1) Hastorf, A.H., Cantril, H., 1954, “They saw a game: A case study,” The Journal of Abnormal and Social Psychology, 49,

17. Hostile Media Effect
Vallone, Ross and Lepper (1985) studied the 1980 U.S. presidential elections.
Approximately 1/3 of the 160 subjects (registered voters) felt that the media had been biased. In ~90% of these cases, respondents felt the bias was against the candidate they supported.2
2) Vallone, R.P., Ross, L., Lepper, M.R., 1985, “The hostile media phenomenon: Biased perception and perceptions of media bias in coverage of the Beirut massacre,” Journal of Personality and Social Psychology, 49,

18. Some Conclusions Perceptions are selective by nature.
Perception depends on cognitive and motivational factors.
Decision makers should question their own motivations and expectations while making judgments and decisions.

19. Cognitive Dissonance

20. Cognitive Dissonance
Festinger and Carlsmith’s (1959) experiment. (Tedious tasks.)

21. I would lie… … for twenty dollars or for free, but not for one dollar!
So, I make myself believe that the tasks were indeed enjoyable if I am paid only $1.
Cognitive dissonance says that people try to reduce or avoid psychological inconsistencies.

22. Self-Perception Theory
Festinger regarded cognitive dissonance as a negative motivation factor, one that should be avoided.
Bem disagreed and argued that people build their beliefs from observing themselves behave.

23. Self-Perception Theory
Argues that people build their beliefs and attitudes based on how they behave under various situations.
People tend to do that more when their internal cues about the situation are weak. (i.e. they do not have preconceived attitudes about the situation.)

24. So what happened… … in Festinger and Carlsmith’s experiment?
$1 case subjects looked at their own behaviors and concluded that they should have enjoyed the tasks, … since they would not lie for $1.
$20 case subjects concluded that they bent the truth a little for the money involved.

25. The Difference
Cognitive Dissonance Theory attributes the findings to a motivation to reduce inner conflict.
Self-Perception Theory explains the findings in terms of how people infer the causes of their behaviors.

26. Two Main Types of Dissonance
Pre-Decisional Dissonance
Sherman and Gorkin’s (1980) experiment.
Kantola, Syme, and Campbell’s (1984) study.
Doob et al.’s (1969) experiment. (Mouthwash.)
Post-Decisional Dissonance
Knox and Inkster’s (1968) survey. (Horse bets.)
Frenkel and Doob’s survey (1976) (Elections.)

27. Conclusions Marketing: Explicitly label introductory offers.
Politics – Social Activism: Solicit small contributions to campaigns and social causes.
Aronson’s (1972) statements.
Changes in attitude can follow changes in behavior.

28. Memory and Hindsight Biases

29. Is Memory Reconstructive?
Myers’ (1990) example.
“Close your eyes and recall a scene in which you experienced something pleasurable.”

30. Is Memory Reconstructive?
Loftus and Palmer’s (1974) experiments.
“How fast were the cars going?”
“Did you see any broken glass?”
…when the cars smashed, bumped, etc?

31. Are Memories Stored Separately?
Bransford and Franks (1971) (Ants)
There is an element of “memory construction” when remembering.

32. Hindsight Bias “I-knew-it-all-along” effect
Elections, medical decisions, buying decisions, games, etc.
Do you have your own examples?

33. How to Reduce Hindsight Bias
Consider reasons why results might have turned out differently.
Slovic and Fischhoff’s (1977) study.

34. Plasticity

35. Plasticity
“Plasticity … refers to a discrepancy in how people answer two versions of the same question.”1
1) Plous, Scott, 1993, The Psychology of Judgment and Decision Making, pp.58, McGraw-Hill, New York, NY.

36. Example Alternative A: Losing $50 with p=1.00.
Alternative B: Losing $200 with p=0.25 and losing nothing with p=0.75.
EV(Alternative A) = EV(Alternative B)
About 80% choose Alternative B.

37. However
When put in an insurance premium context, about 65% choose Alternative A.
Possible reasons:
Insurance premium context emphasizes the potential loss ($200), thus making it look big.
Buying insurance is considered a prudent behavior socially. …?

38. Order Effects
The order of consecutive questions, or the order of response alternatives to questions may affect the responses by individuals.
Question order effects
Response alternative order effects

39. Question Order Effects
From Schumann and Presser (1981)
About half of the respondents were asked the two questions in the order below:
1) Do you think a Communist country like Russia should let American newspaper reporters come in and send back to America the news as they see it?
2) Do you think the United States should let Communist newspaper reporters from other countries come in and send back to their papers the news as they see it?

40. Question Order Effects
The other half of the respondents were asked the two questions in the reverse order as given below:
1) Do you think the United States should let Communist newspaper reporters from other countries come in and send back to their papers the news as they see it?
2) Do you think a Communist country like Russia should let American newspaper reporters come in and send back to America the news as they see it?

41. Results
Yes
Case 1:
Q1 82%
Q2 75%
Case 2:
Q1 55%
Q2 64%

42. Response Alternative Order Effects
These effects are slighter than the question order effects.
A common response order effect is a type of recency effect, where respondents tend to choose the last response alternative.

43. Example
From Schumann and Presser (1981)
Version 1: Should divorce in this country be easier to obtain, more difficult to obtain, or stay as it is now?
Respond percentages: 23%, 36%, and 41%
Version 2: Should divorce in this country be easier to obtain, stay as it is now, or more difficult to obtain?
Respond percentages: 26%, 29%, and 46%
In both cases, the most popular alternative was the last one.

44. What Can be Done?
What can be done to overcome order effects, (considering that we have to put the questions and the responses in one order or another)?

45. Pseudo-Opinions
Some respondents tend to offer opinions even on issues about which they know very little.
Such respondents tend to shape their “pseudo-opinions” (since they do not have “real opinions”) according to how the question is asked.

46. Example How Close Do You Fell to These Nationalities?
From Hartley (1946)
How Close Do You Fell to These Nationalities?
Danireans
Pireneans
Wallonians
More than 80% of the respondents rated these “nationalities” even though they do not exist!

47. Example What is your opinion of the Metallic Metals Act?
From Gill (Tide Magazine, 1947)
What is your opinion of the Metallic Metals Act?
Good move for U.S.
Should be left to individual states
O.K. for foreign states, but should not be required in U.S.
Of no value at all.
70% of the respondents gave an opinion although there is no Metallic Metals Act!

48. Pseudo-Op.s In Political Affairs
Pseudo-opinions can become important factors in political affairs.
In general, about 30% of respondents offer pseudo-opinions.
30% can change the result of almost any major election and referendum.
Pseudo-opinions are particularly common in issues concerning foreign and military policy.

49. Filtering Pseudo-Opinions
Offering response alternatives such as “No opinion” or “I don’t know” can help filter out pseudo-opinions.
However, there may be a trap here. People may try to look like they know about the issue for social reasons, even if they do not.
“Choose not to offer opinion at this time” may be a better alternative. Saves face.

50. Inconsistency
“Inconsistency refers to a discrepancy between two related attitudes (attitude-attitude inconsistency) or between an attitude and a corresponding behavior (attitude-behavior inconsistency).”1
1) Plous, Scott, 1993, The Psychology of Judgment and Decision Making, pp.58, McGraw-Hill, New York, NY.

51. A-A Inconsistency Example
From Prothro and Grigg (1960)
Democratic principles and specific applications.
Random sample of registered voters in Ann Arbor, MI and Tallahassee, FL.
51% “Only well-informed people should be permitted to vote.”
79% “Only taxpayers should vote.”

52. A-B Inconsistency Example
From Darley and Batson (1973)
Many seminary students who were about to give a speech on the parable of the Good Samaritan failed to help a person in need when they were rushed.

53. How Common is Inconsistency?
Wicker (1969) reviewed 46 studies and concluded that inconsistency is so common that it is more likely that attitudes will not be closely related to overt behaviors than they will be.
On the other hand, Ajzen and Fishbein (1977) argued that attitudes concerning particular actions and targets are generally good predictors of related behaviors.

54. Wording and Framing Effects

55. Question Wording and Framing
The way a question is worded or framed may affect individuals’ responses to that question.

56. Safe and Safer
40% of the respondents of a poll in Britain said the nuclear weapons of their country made them “feel safe.”
When the question was asked slightly differently, 50% of the respondent said the nuclear weapons of their country made them “feel safer.”

57. Another Example
From Converse and Schuman (1970)
“Should the U.S. Army withdraw from Vietnam faster or slower?”
42% “faster,” 16% “slower,” 29% “same as now.”
“Is the pace with which the U.S. Army withdraws from Vietnam too fast, too slow, or about right?”
29% “too slow,” 6% “too fast,” 49% “about right.”

58. Disadvantage of Middle Categories
Middle categories may act as a “safe” alternative since they are “midway” and attract pseudo-opinions.

59. Open Ended vs. Listed Responses
Some responses may be chosen by substantially more respondents when they are listed as specific alternatives than in an open question, (a question without specific response alternatives.)

60. Examples
Schuman and Scott’s (1987) study: “The most important problem facing this country today?”
Schwarz, Hippler, Deutsch and Strack’s (1985) study: “How much TV do you watch daily?”

61. Hilarious Examples “How long was the movie?”
From Harris (1973)
“How long was the movie?”
(Mean Answer = 130 min.)
“How short was the movie?”
(Mean Answer = 100 min.)
“How tall was the basketball player?”
(Mean Answer = 79’’)
“How short was the basketball player?”
(Mean Answer = 69’’)

62. “Marketing Application” Example

63. Social Desirability
People tend to choose responses they judge to be “socially desirable” over those they judge not to be so.

64. Examples Nuclear weapons freeze Support for Nicaraguan rebels
From Clymer (1982)
Nuclear weapons freeze
From Budiansky (1988)
Support for Nicaraguan rebels
From Schuman and Presser (1981)
Sending troops in case of a Vietnam-like situation.

65. Allow or Forbid
From Rugg (1941)
“Do you think that the U.S. should allow public speeches against democracy?”
62% “No.”
“Do you think that the U.S. should forbid public speeches against democracy?”
46% “Yes.”
At least 16% would “not allow” rather than “forbid”!

66. Other Examples Repetition of Rugg’s experiment.
Schuman and Presser (1981)
Repetition of Rugg’s experiment.
Hippler and Schwarz (1986)
Peep shows, X-rated films, salt on highways.

67. Framing Decision 1: Alternative A: Gain $240, p=1.00
Alternative B: Gain $1000, p=0.25
84% chose A.
Decision 2:
Alternative C: Lose $750, p=1.00
Alternative D: Lose $1000, p=0.75
87% chose D.

68. When Combined A & D: Lose $760, p=0.75; Gain $240, p=0.25
B & C: Lose $750, p=0.75; Gain $250, p=0.25
B & C are better than A & D when combined, but far more people preferred A & D over B & C.

69. Other Examples Alternative programs to fight a disease.
Tversky and Kahneman (1981)
Alternative programs to fight a disease.
Schelling (1981)
Child tax cuts vs. “no-child tax”.

70. Psychological Accounting
People tend to frame outcomes as well as choices. Tversky and Kahneman called this “psychological accounting.”
Example: Losing your ticket vs. losing money. (Tversky and Kahneman, 1981.)
Example: Calculator on sale vs. jacket on sale. (Tversky and Kahneman, 1981.)

71. Conclusions People’s answer are a function of (among other things):
Question order
Question context
Question format (open vs. closed)
Whether the pseudo-opinions were filtered
Existence of catch phrases in questions

72. Conclusions …:
Range of suggested response alternatives
Order of the response alternatives
Existence of middle categories as response alternatives
Framing of problems (gains vs. losses)
It would be wise not to take the findings of surveys at face value, but approach them from a critical perspective instead.

73. Expected Utility Theory

74. Expected Value
Example: Flip a coin and throw a die. If the coin shows heads and the die show an even number you get $2 times the number on the die. Otherwise you get nothing.

75. Expected Value
0.5 * = 0.083
1: 0.166
0.5 * = 0.083
2: 0.166
3: 0.166
0.5 * = 0.083
Throw die
4: 0.166
0.5 * = 0.083
Heads: 0.5
0.5 * = 0.083
5: 0.166
0.5 * = 0.083
6: 0.166
Flip coin
1: 0.166
0.5 * = 0.083
2: 0.166
0.5 * = 0.083
Tails: 0.5
3: 0.166
0.5 * = 0.083
Throw die
4: 0.166
0.5 * = 0.083
5: 0.166
0.5 * = 0.083
6: 0.166
0.5 * = 0.083

76. Expected Value
0.083*$2* *$2* *$2*6
= $2

77. St. Petersburg Paradox ½ * $2 + ¼ * $4 + 1/8 * 8 + … + 1/K * ($2)K
= $ $ $1 + … $1
= 
How much would you pay to play this game?

78. Utility
Utility
Wealth

79. Expected Utility  pi * ui
Sum of the utilities of all possible outcomes of a chance event.
 pi * ui

80. Principles of Expected Utility Th.
Ordering alternatives
Dominance
Cancellation
Transitivity
Continuity
Invariance

81. Paradoxes in Rationality

82. Allais Paradox Situation 1: Situation 2:
Alternative A: p=1, $1,000,000
Alternative B: p=.10, $2,500,000; p=.89, $1,000,000; p=.01, $0
Situation 2:
Alternative A: p=.11, $1,000,000; p=.89, $0
Alternative B: p=.10, $2,500,000; p=.9, $0

83. Allais Paradox 10 89 1 A $ 1M $ 1M $ 1M 10 89 1 Situation 1 B $ 2.5M
$ 0 10 89 1 A
$ 1M
$ 0
$ 1M
Situation 2 10 89 1 B
$ 2.5M
$ 0
$ 0

84. Ellsberg’s Paradox 30 BALLS 60 BALLS Betting Alternatives Red Black
Yellow
1: A red ball
$100 $0
2: A black ball
1: A red or yellow ball
2: A black or yellow ball

85. Intransitivity Dimensions IQ Experience Applicants A 120 1 year B 110
2 years C
100
3 years

86. Intransitivity Gamble Probability of a Win Payoff Expected Value A
7/24
$5.00
$1.46 B
8/24
$4.75
$1.58 C
9/24
$4.50
$1.69 D
10/24
$4.25
$1.77 E
11/24
$4.00
$1.83

87. Intransitivity Committee Members Ann Bob Cindy Don Ellen 1 2 3
Candidates
Ann
Bob
Cindy
Don
Ellen
Joe Schmoe 1 2 3
Jane Doe
Al Einstein

88. Preference Reversals Pair High Probability EV High Payoff 1
.99 win $4.00
.01 Lose $1.00
$3.95
.33 win $16.00
.67 Lose $2.00
$3.94 2
.95 win $2.50
.05 Lose $0.75
$2.34
.40 win $8.50
.60 Lose $1.50
$2.50 …

89. Are Violations of EUT Irrational?
No information about the cost of errors versus the cost of following the principles.
A non-logical strategy may be rational if it provides a good approximation to the utility provided by normative methods, in the long run.

90. Decision Making Models

91. Satisficing
People “satisfice” rather than optimize for several reasons:
They do not have complete information
They do not understand the available information
They cannot calculate precisely …

92. Prospect Theory
Assumes that value functions for gains and losses are different.

93. Prospect Theory Problem 1: Problem 2: Alternative A: p=.50, gain $1000
Alternative B: p=1.00, gain $500 (84% chose this.)
Problem 2:
Alternative A: p=.50, lose $1000 (70% chose this.)
Alternative B: p=1.00, lose $500

94. Decision Weights
Decision
Weight
Probability

95. Prospect Theory Problem 1: Problem 2:
Alternative A: p=1/1000, win $5000 ( 75% chose this.)
Alternative B: p=1.00, win $5
Problem 2:
Alternative A: p=1/1000, lose $5000
Alternative B: p=1.00, lose $5 (>80% chose this.)

96. Certainty Effect
People attribute more value (utility) to eliminating risk versus reducing risk.
Russian roulette example.
Probabilistic insurance example.

97. Pseudocertainty Effect
People value eliminating risk more than reducing it even when the certainty is apparent rather than real.
Vaccine example.
Dry cleaner example.

98. Regret Theory Based on two basic assumptions:
People feel rejoice or regret according to the outcomes of their decisions.
People try to anticipate and take account of these sensations when making decisions.
Regret theory can explain many of the paradoxes we discussed above.