L27: Heuristics

What do heuristics create in decision-making?

Systematic, predictable biases.

Who received the 2002 Nobel Prize in Economics for insights on heuristics?

Daniel Kahneman.

What did Tversky & Edwards (1966) find about people's predictions?

People probability match instead of using the optimal strategy.

What is the optimal strategy when predicting which light will turn on?

Always choose the left light, which appears 70% of the time.

What is local representativeness?

The belief that a series of independent trials with the same outcome will be followed by an opposite outcome sooner than expected by chance.

What did Kahneman & Tversky (1972) observe about people's random sequences?

People try to make them look random and avoid long runs.

What did Gilovich, Vallone, & Tversky (1985) study in basketball?

Beliefs in the 'hot hand'—the idea that players who score consecutively are more likely to score again.

What did the statistical analyses reveal about the 'hot hand' phenomenon?

There is no increase in shot success during supposed 'hot' streaks.

What is the conjunction fallacy?

The error of believing that the probability of two events occurring together exceeds the probability of either event alone.

What did Tversky & Kahneman (1982) illustrate with the Taxi Problem?

People often ignore base rates when estimating probabilities.

In the Taxi Problem, what is the base rate of orange cabs?

15%.

What was the posterior probability that the cab was orange after a witness identified it?

41%.

What did Casscells et al. (1978) find regarding medical diagnosis?

Many medical students ignored base rates, leading to incorrect probability estimates.

What did Cosmides & Tooby (1996) discover about reasoning with frequencies?

Presenting problems in natural frequencies improves reasoning accuracy.

What is the significance of giving real numbers instead of abstract probabilities?

The problem of misjudgment is less severe with real numbers.

How do humans typically interpret random coincidences?

They often misinterpret them as real patterns.

What is a common misconception about random sequences?

People believe there should be a perfect randomness in short sequences.

What can lead to scapegoating or conspiracy theories?

Misinterpretation of coincidences and searching for patterns.

What is the result of base rate neglect in educated individuals?

Even highly educated individuals can commit base-rate neglect, often misestimating probabilities.

What is the effect of presenting information in frequency format?

It leads to more accurate answers compared to probability format.

What do Kahneman and colleagues suggest about human reasoning?

Humans often ignore prior probabilities, leading to severe consequences.

What is the implication of the findings on heuristics and biases?

They highlight the limitations of human decision-making and reasoning.

What is the representativeness heuristic?

A cognitive bias where individuals assess the probability of an event based on how much it resembles a typical case, often neglecting base rates.

How does the representativeness heuristic relate to base rate neglect?

It fails to consider the actual frequency of events, leading to biased judgments.

What is anchoring in decision-making?

The tendency to rely heavily on the first piece of information encountered (the anchor) when making decisions.

What experiment demonstrated the anchoring effect?

Tversky & Kahneman (1974) found that participants' estimates of a number were biased by an initial random number they were shown.

What is the availability heuristic?

A mental shortcut where people estimate the likelihood of events based on how easily examples come to mind.

What did Tversky & Kahneman's 1973 experiment reveal about the availability heuristic?

Participants incorrectly judged the frequency of words with 'K' as the first letter versus the third letter, favoring the more easily recalled option.

How does imagination influence the availability heuristic?

Imagining an event can increase its perceived likelihood, as shown in Carroll's 1978 experiment related to the 1976 US presidential election.

What is hindsight bias?

The tendency to see events as having been predictable after they have already occurred.

What did Fischhoff's 1975 study demonstrate about hindsight bias?

Participants who knew the outcome of historical events assigned higher probabilities to those outcomes than those who did not.

What was the finding of Fischhoff & Beyth's 1975 study on hindsight bias?

Participants overestimated the probabilities of events that occurred and underestimated those that did not when recalling their prior judgments.

What is framing in decision-making?

The way information is presented can significantly affect decisions and judgments.

What was the Asian Disease Problem experiment?

Kahneman & Tversky (1981) showed that framing outcomes as gains or losses influenced people's choices, demonstrating loss aversion.

How did Rugg's 1941 study illustrate the impact of framing?

The wording of questions about allowing or forbidding speeches dramatically shifted public opinion.

What does rational choice theory assume?

It defines normatively optimal decisions but often overlooks human cognitive limitations and context.

What are heuristics in decision-making?

Fast, intuitive decision rules that evolved to allow quick judgments but can lead to biases.

What is the relationship between heuristics and cognitive biases?

While heuristics are efficient, they make individuals vulnerable to biases and manipulation.

What is base-rate neglect?

The failure to consider the base rate or prior probabilities when making judgments, often leading to incorrect conclusions.

What is the significance of Tversky & Kahneman's work in psychology?

Their research highlighted the systematic biases in human judgment and decision-making processes.

What role does cognitive context play in decision-making?

Human cognition is influenced by context, which can lead to errors in judgment, especially under uncertainty.

How can cognitive biases be exploited?

They can be used for persuasive or strategic purposes in various fields, including marketing and politics.