Heuristics & Biases: The Anchoring & Adjustment & Availability Heuristics Psychology 466: Judgment & Decision Making Instructor: John Miyamoto 10/13/2015: Lecture 03-1 Note: This Powerpoint presentation may contain macros that I wrote to help me create the slides. The macros aren’t needed to view the slides. You can disable or delete the macros without any change to the presentation.

Lecture probably ends here Outline Briefly discuss this week's readings Summary re Linear Judgment Models Overview of the Heuristics & Biases Movement Anchoring & Adjustment Heuristic Availability Heuristic Lecture probably ends here Reading from Smart Choices Psych 466, Miyamoto, Aut '15

Readings from Smart Choices for Week 3 Smart Choices Ch 1 (Making smart choices) Ch 10 (Psychological traps) Chapter 1 is an introduction to practical decision making Chapter 10 is a quick survey of how heuristic reasoning can negatively impact practical decision making. Readings from HD and TFS Psych 466, Miyamoto, Aut '15

Readings from HD and TFS for Week 3 Hastie & Dawes (HD) Ch 4: Anchoring and adjustment; Ch 5: Judging heuristically (availability) Kahneman, Thinking, Fast and Slow (TFS), pp. 109 - 146 Ch 10: The law of small numbers; Ch 11: Anchors; Ch 12: The science of availability; Ch 13: Availability, emotion and risk Relevant (but Not Required) Reading re Availability Psych 466, Miyamoto, Aut '15

Relevant (but Not Required) Reading I will be discussing the following papers in lecture. You will be responsible for what is discussed in lecture, but not the details from the papers. Ross, M., Sicoly, F. (1979). Egocentric biases in availability and attribution. Journal of Personality and Social Psychology, 37, 322-336. Distributed as a pdf file on the course website. Schwarz, N., Bless, H., Strack, F., Klump, G., Rittenauer-Schatka, H., & Simons, A. (1991). Ease of retrieval as information: Another look at the availability heuristic. Journal of Personality and Social Psychology, 61(2), 195-202. Distributed as a pdf file on the course website. Comment re Part I of TFS Psych 466, Miyamoto, Aut '15

Kahneman, Thinking, Fast and Slow Part I. Two Systems 1. The Characters of the Story 2. Attention and Effort 3. The Lazy Controller 4. The Associative Machine 5. Cognitive Ease 6. Norms, Surprises, and Causes 7. A Machine for Jumping to Conclusions 8. How Judgments Happen 9. Answering an Easier Question Assigned Weeks 1 - 2 but NO LECTURES up to now. At least skim it to see the assumptions re cognitive processes. Your understanding will grow over time. Remarks re Linear Judgment Models Psych 466, Miyamoto, Aut '15

Importance of Linear Models in the Psychology of Judgment 1960 – 1980: Provided strong evidence that human judgment had difficulty processing complex information. Gave momentum to the heuristics & biases movement. 1990 – present: Continued study of linear judgment models provides evidence for the value of heuristic reasoning. Example: The less-is-more effect. Accuracy-Effort Tradeoff (Diagram) Psych 466, Miyamoto, Aut '15

Accuracy-Effort Tradeoff Accuracy High Effort High Method 1: Multiple regression applied to existing data. Method 2: Multiple regression applied to a judge’s predictions Method 3: Importance weighting method Method 4: Unit weighting model Method 0: Intuitive judgment (holistic judgment). Accuracy Low Effort Low Same Slide with Note re Less-Is-More Effect Psych 466, Miyamoto, Aut '15

Accuracy-Effort Tradeoff Accuracy High Effort High Method 1: Multiple regression applied to existing data. Method 2: Multiple regression applied to a judge’s predictions Method 3: Importance weighting method Method 4: Unit weighting model Method 0: Intuitive judgment (holistic judgment). Less-Is-More effect contradicts the claim that there is an accuracy-effort tradeoff. (Gigerenzer & ABC Group) Current issues: Are heuristics always bad (maladaptive)? When are they good and when are they bad? What are the psychological mechanisms on which heuristics are based? Accuracy Low Effort Low xx Psych 466, Miyamoto, Aut '15

Heuristics & Biases Movement Linear judgment models – part of the critique of human judgment. Not usually regarded as part of the heuristics and biases movement. Heuristics & Biases Movement (H&B movement) Claim: Human cognition does not follow the pattern of a rational agent model. (Rational model = expected utility theory & Bayesian decision model) Claim: Human reasoning uses heuristics that are often effective, but heuristics can lead to systematic errors. Claim: Understanding the cognitive mechanism will lead us to understand why people use the heuristics that they use. Digression: What is a Heuristic? Psych 466, Miyamoto, Aut '15

What is a Heuristic? A heuristic is a reasoning strategy that is used to solve a problem, make a decision or form a judgment about something. Original meaning: A heuristic is a strategy that leads to insight, discovery and learning. Examples To decide whether Option A is better than Option B, assume that various specific situations prevail - is A better than B in these situations? To decide whether Option A is better than Option B, ask people who chose A how they feel about their choice? Do the same for Option B. Example of a heuristic: If you lose something, mentally retrace your path to find where you have lost it. Example of a heuristic: In mathematics, when trying to prove a general theorem, first try to prove a simpler special case. Same Slide with Expanded Description of Heuristic Strategies Psych 466, Miyamoto, Aut '15

What is a Heuristic? A heuristic is a reasoning strategy that is used to solve a problem, make a decision or form a judgment about something. Heuristic reasoning strategies .... .... are often fast and effective, .... place low demands on cognitive resources. .... but they can lead to errors in particular situations. Observed patterns of errors can be used to diagnose the heuristics that people use. Heuristic reasoning strategies are contrasted with optimal computations and algorithms. Example of a heuristic: If you lose something, mentally retrace your path to find where you have lost it. Example of a heuristic: In mathematics, when trying to prove a general theorem, first try to prove a simpler special case. Classroom Experiment: Rainfall in Miami Psych 466, Miyamoto, Aut '15

Classic Example of AA Strategy Ask 50% of the class to close their eyes. In a moment we will switch the group that has their eyes open. Condition 1 of 2 Psych 466, Miyamoto, Aut '15

Condition 1: AA Experiment Is the average yearly rainfall in Miami (Florida) greater or less than 2 inches per year? Now write down your best guess as to the average yearly rainfall in Miami. Switch Psych 466, Miyamoto, Aut '15

Switch Roles If you previously had your eyes open, close them now. If you previously had your eyes closed, open them now. Condition 2 of 2 Psych 466, Miyamoto, Aut '15

Condition 2: AA Experiment Is the average yearly rainfall in Miami (Florida) greater or less than 750 inches per year? Now write down your best guess as to the average yearly rainfall in Miami. Open Your Eyes Psych 466, Miyamoto, Aut '15

Everyone Can Open Their Eyes Summary of Conditions 1 and 2 Psych 466, Miyamoto, Aut '15

Questions Asked in Conditions 1 and 2 Is the average yearly rainfall in Miami (Florida) greater or less than …. Now write down your best guess as to the average yearly rainfall in Miami. JM: Write down students' estimates on the blackboard. Condition 1 2 inches/year Condition 2 750 inches/year Typical Finding for this Experiment Psych 466, Miyamoto, Aut '15

Typical Finding in Anchoring & Adjustment (AA) Experiment Initially Consider Initially Consider 2 Inches as a Possibility 750 inches as a Possibility Final Estimate < Final Estimate Final estimate is biased towards the "anchor" (the number in the first question) FYI: CurrentResults.com states that the average yearly rainfal in Miami is 61.9 inches (157.2 cm). Average yearly rainfall in Seattle is 37.7 inches (95.8 cm). Anchoring and Adjustment Heuristic - Definition Psych 466, Miyamoto, Aut '15

Anchoring & Adjustment Heuristic Step 1: Consider an initial estimate of the quantity you are trying to judge. This is the “anchor.” (People often know that this initial estimate isn't perfectly accurate.) Step 2: Adjust the initial estimate in the direction that corrects for assumed sources of error. Psychological Fact: Adjustments are typically too small! Result: Final judgment is overly influenced by the anchor, i.e., the final estimate is biased towards the anchor. Example: TV adds that ask you to guess whether you need to pay, e.g., $150 for a new set of Ginzu knives. Example of the Anchoring and Adjustment Heuristic Psych 466, Miyamoto, Aut '15

Another Example of Anchoring-and-Adjustment Judgment Problem: Suppose you are trying to estimate how many hours per week you will have to study if you take a famously difficult course. People consider an initial estimate that is easy to produce. E.g., begin with an estimate of the hours per week of a typical course. Call this the initial estimate. To produce a final estimate, adjust the initial estimate to a higher based on the expected course difficulty. Prediction: This cognitive strategy will underestimate the hours per week because the anchor is lower than the true number of hours, and adjustments are typically too small. Other Examples of Anchoring and Adjustment Psych 466, Miyamoto, Aut '15

More Examples of Anchoring and Adjustment Example: Suppose a biased or unreliable news source tells you that something extreme will happen, e.g, next year 50% of retail banks will fail. You don’t trust this news source, so you adjust the estimate from 50% to something you think is more realistic, but your adjustment will typically be too small. Example: People anchor on their own opinions and values and then adjust to take into account other people’s differences (anchoring on ourselves). Consequence: We tend to expect others to be more like ourselves than they are. EXAMPLES MENTIONED IN HASTIE & DAWES: * Examples of anchoring on self: Subjects were asked whether they were willing to do an outrageous act, e.g., wear a sandwich board that says "Repent!" on campus, and were asked what percentage of other undergrads would agree to do the act. Those who agreed to do the act predicted that 63% of undergrads would do the act, and those who refused to do the act predicted that 23% of undergrads would do the act. * Example: Voters expect that disproportionately many other voters share their own opinions. Experiment on False Consensus Effect Psych 466, Miyamoto, Aut '15

Lee Ross on the False Consensus Effect Ross, L., Greene, D., & House, P. (1977). The “false consensus effect”: An egocentric bias in social perception and attribution processes. Journal of Experimental Social Psychology, 13(3), 279-301. Subjects were asked: Are you willing to do an outrageous act, e.g., wear a sandwich board that says "Repent!" on campus? What percentage of other undergrads would agree to do the act? Predicted % Subject’s Choice n (%) Wear Sign Not Wear Sign Yes Wear Sign 27 (51%) 58.3% 41.7% Won’t Wear Sign 26 (49%) 29.7% 70.3% Typical Research Strategy in Heuristics & Biases Research Psych 466, Miyamoto, Aut '15

Typical Research Strategy in Heuristics & Biases Research Perform experiments that demonstrate reasoning errors. Use these errors to diagnose the heuristics that people are using. ----------------------------------------------------------------------------- Example: Experiment shows that people are influenced by an initial anchoring estimate that is too high or too low. Use the demonstration of the influence of the anchor as evidence that people use an anchoring and adjustment strategy. Cognitive Mechanisms that Produce Anchoring/Adjustment Bias Psych 466, Miyamoto, Aut '15

Why Are Estimates Biased Towards the Anchor Why Are Estimates Biased Towards the Anchor? Why are Adjustments Typically Too Small? Adjustments stop when you reach the range of values which seem to be possible answers. E.g., I think that the rainfall in Miami must be between 20 - 100 inches per year. If the anchor = 2 inches, I adjust until my estimate is over 20. If the anchor is 750 inches, I adjust until my estimate is under 100. Cognitive laziness. I quickly terminate the process of finding the "best" estimate. Priming: The anchor primes similar thoughts which influence the production of the estimate. This idea fits best with findings like the false concensus effect. Overview of the Availability Heuristic Topic Psych 466, Miyamoto, Aut '15

Overview of Availability Heuristic Definition of the availability heuristic Standard memory model Different aspects of human memory process cause different types of availability biases. Experiments reveal different aspects of the availability heuristic. What Is the Availability Heuristic? Psych 466, Miyamoto, Aut '15

What is the Availability Heuristic? Availability heuristic – events are judged more probable if ... examples of similar events are easy to recall or examples of similar events easy to construct mentally (in imagination). Same Slide with More Examples of Availability Heuristic Psych 466, Miyamoto, Aut '15

What is the Availability Heuristic? Availability heuristic – events are judged more probable if examples of similar events are easy to recall or easy to construct mentally (imagine). Example: How likely is it that the next U.S. presidential election will produce a prolonged voting impasse like the 2000 presidential election (Bush versus Gore)? Example: How likely is it that the UW will be closed due to snow this winter? Why Is the Availability Heuristic a Reasonable Judgment Procedure? Psych 466, Miyamoto, Aut '15

Why Is the Availability Heuristic a Reasonable Procedure? In general, frequently encountered events are easier to recall. The availability heuristic exploits the converse relationship: Events that are easy to recall are thought to occur frequently. Possibilities that are easy to imagine seem more likely. Frequency of Experience Other Factors Availability of Memory for an Event Learning Availability of Memory for an Event Judged Frequency of Experience Judgment of Likelihood Standard Memory Model (Diagram) Psych 466, Miyamoto, Aut '15

Examples from Plous (The Psychology of Judgment and Decision Making) 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. Because shark attacks receive more publicity, information about shark attacks is more readily available.   Which claims more lives in the United States: lightning or tornadoes? More Americans are killed annually by lightning than by tornadoes. Because tornadoes receive more publicity than occasional lightning strikes, the most common answer is tornadoes.     Another Example Psych 466, Miyamoto, Aut '15

Standard Memory Model External Stimulus Sensory Registers Visual Auditory Haptic Gustatory Olfactory Working Memory Control Processes Rehearsal Coding Symbol and Image Manipulation Information Processing Strategies Long-Term Memory Memory Traces Episodic Semantic Perceptual Procedural Cognitive Toolbox Judgment Strategies Decision Strategies Heuristics encoding retrieval control processes Influence of Availability Availability biases are the consequence of non-frequency factors that influence memory encoding, retrieval, and mental construction. Briefly Show Next Slide – A Related But Different Diagram for the Standard Memory Model Psych 466, Miyamoto, Aut '15

H&D Fig. 1.1 Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory An alternative diagram for the standard memory model. The preceding slide and the current slide are two different versions of the same idea. The preceding slide emphasizes the role of encoding and retrieval processes. Psych 466, Miyamoto, Aut '15 Return to Previous Standard Memory Model with Color Emphasis

Standard Memory Model External Stimulus Sensory Registers Visual Auditory Haptic Gustatory Olfactory Working Memory Control Processes Rehearsal Coding Symbol and Image Manipulation Information Processing Strategies Long-Term Memory Memory Traces Episodic Semantic Perceptual Procedural Cognitive Toolbox Judgment Strategies Decision Strategies Heuristics encoding retrieval control processes Influence of Availability Availability biases are the consequence of non-frequency factors that influence memory encoding, retrieval, and mental construction. Return to Earlier Slide: Why Is Availability a Reasonable Heuristic? Psych 466, Miyamoto, Aut '15

Why Is the Availability Heuristic a Reasonable Procedure? In general, frequently encountered events are easier to recall. The availability heuristic exploits the converse relationship: Events that are easy to recall are thought to occur frequently. Possibilities that are easy to imagine seem more likely. Frequency of Experience Other Factors Availability of Memory for an Event Learning Availability of Memory for an Event Judged Frequency of Experience Judgment of Likelihood Examples of Misperceived Risk from Scott Plous Psych 466, Miyamoto, Aut '15

Different Types of Availability Bias Biased exposure to events. Sampling bias Encoding and retrieval biases: Solo status and egocentric bias. Biases due to differential ease of retrieval or mental constructions Examples of Availability Bias Due to Biased Exposure Psych 466, Miyamoto, Aut '15

Availability Bias Due to Sampling Bias or Biased Exposure In 2002, which is more likely, death in a motor vehicle accident or death from influenza or pneumonia? 2002 motor vehicle deaths = 15.3 per 100,000; Influenza/pneumonia deaths = 22.8 per 100,000 TV coverage obviously emphasizes dramatic events and underrepresents undramatic events. E.g., more Americans die from diabetes and stomach cancer than from homicide and car accidents by a ratio of nearly 2:1. Clinical belief that child sexual molestors do not stop on their own. People who are caught are much more likely to be serial child molestors than a one-time child molestor. Hamill, Nisbett & Wilson Study – Insensitivity to Sampling Bias Psych 466, Miyamoto, Aut '15

People Tend to be Insensitive to Sources of Sampling Bias Hamil, Wilson, & Nisbett (1980). Subjects viewed one of two video tapes that shows an interview with a (fake) prison guard. Humane tape: The prison guard is remarkably humane and compassionate. Inhumane tape: The prison guard is brutal and cruel. Condition 1: Subjects were given NO INFORMATION about the typicality of the guard. Condition 2: Subjects were told that the guard was TYPICAL of guards at that prison. Condition 3: Subjects were told that the guard was very ATYPICAL. Diagram Showing the Experimental Design of Hamil, Wilson & Nisbett Psych 466, Miyamoto, Aut '15

People Tend to be Insensitive to Sources of Sampling Bias The graphic for the table is stored in ‘e:\p466\resources\hamill.wilson.nisbet.diagram.docm’. After viewing the video, subjects are asked: In general, what do you think prison guards are like? Results for Hamil, Wilson & Nisbett Psych 466, Miyamoto, Aut '15

People Tend to be Insensitive to Sources of Sampling Bias predict humane predict inhumane The graphic for the table is stored in ‘e:\p466\resources\hamill.wilson.nisbet.diagram.docm’. Results showed little effect of the information about typicality. Subjects predicted that most guards were consistent with the video tape (either humane or inhumane) without regard for his typicality. Can We Resist Influence of Sampling Bias? Psych 466, Miyamoto, Aut '15

Tuesday, October 13, 2015: The Lecture Ended Here Psych 466, Miyamoto, Aut '15

Remarks on Insensitivity to Sampling Bias or Exposure Bias Things we all know: TV ads do not give an accurate picture of the value of products. Political spin doctors are trying to manipulate our beliefs. TV news is not a representative sampling of events. The portrayal of men/women, black/whites, rich/poor, gay/straight, on TV is not a representative presentation of these groups. Our own experiences are not typical of everybody’s experience. Etc. We know that these information sources are biased, but can we correct for these biases or take them into account when forming beliefs? Doubtful. Availability promotes influence of biased information. Anchoring and adjustment promotes influence of biased information. Continuation of the Remarks on this Slide Psych 466, Miyamoto, Aut '15

Remarks on Insensitivity to Sampling Bias or Exposure Bias Insensitivity to sampling bias (exposure bias) is not strictly a cognitive bias. The world feeds us biased information, .... .... but we have difficulty taking this into account. Note that these results can result from a combination of availability bias and anchoring and adjustment bias. Return to List of Different Types of Availability Bias Psych 466, Miyamoto, Aut '15

Different Types of Availability Biases Biased exposure to events Sampling bias Encoding and retrieval biases: Egocentric bias & solo status. Dramatic versus undramatic events Biases due to differential ease of mental constructions Psych 466, Miyamoto, Aut '15 Encoding & Retrieval Biases – Famous Names x Men/Women