Judgement and Decision Making

Reasoning

Evaluation of a conclusion based on given information. Ex) "Is it reasonable to conclude that X is true?"

Judgement

Arriving at a conclusion using given information. Ex)"given that X is true and Y is true, then Z must be true"

Decision Making

Making a choice between options in situations that are risky or uncertain. Ex) "given the information I know, and the possible consequences, I should go with Z"

Informativeness (Kahneman)

Errors give us information about how our reasoning, judgement, and decision-making processes work. When decisions are correct, it can be difficult to understand why. When failures occur, we learn something about how the system works

Normative approach

Describes how we should think in a given situation.

Descriptive approach

Describes how we actually think in a given situation.

Rational Decision Making

A structured process involving defining the problem, identifying criteria, weighting criteria, generating alternatives, rating alternatives, and computing the optimal decision.

Bounded Rationality

There are limits to our rationality, including time, energy, prior knowledge, and consequences.

What are the two types of reasoning

Deductive and inductive

Deductive reasoning

Working from general premises to a specific conclusion. Ex) the buses have a schedule, things that are scheduled run on time

Inductive reasoning

Working from specific pieces of data or information and working towards a conclusion. Ex) Every time I have caught the bus in the last two weeks it has been a few minutes late, therefore my bus will probably be late today.

Syllogistic reasoning

Involves two premises and a conclusion, with universal or particular qualifiers, validity vs. truth. Ex) all students are bright, all bright people complete assigned work on time, therefore all students complete assigned work on time.

Conditional reasoning

Evaluating if a conclusion is valid based on a condition statement. Ex) if someone like flowers the they're a sensitive person, Ann likes flowers, therefore Ann is a sensitive person.

Antecedent

The 'if' part of a conditional statement. Ex) if someone likes flowers, then they're a sensitive person

Consequent

The 'then' part of a conditional statement. Ex) if someone likes flowers, then they're a sensitive person

Deductive Reasoning Errors

Tendency to interpret condition statements as biconditional. Ex) If X, then Y is not the same as if Y, then X

Confirmation bias

We tend to seek out information that is consistent with our hypotheses.

Myside bias

We tend to be overly swayed by information that is on 'our' side of an argument and discount evidence on the other side.

Belief bias

Knowing the truth can interfere with our ability to assess the validity of an argument.

Ex)

-all flowers have petals

-daisies have petals

-therefore, all daisies are flowers

Inductive Reasoning Errors

Inductive reasoning conclusions are less firm and can be inaccurate.

Ex) assuming professors won't give extensions

Constraints are needed to prevent unreasonable conclusions

Ex) noticing that professors with last names starting with D, F, and J give extensions but professors with A and E don't

Availability Heuristic

We estimate the probability of things that come to mind easier as being more frequent that the probability of things are more difficult to bring to mind

Ex) the frequency of names that start with J vs. the frequency of names that end with E, are there more deaths per year attributed to strokes or motor vehicle accidents

Illusory Correlations

Seeing relationships where none exist.

Ex) madden jinx -appearing on the cover of the video game is thought by some to be related to some event after - serious injury, performance slump, personal problems, etc.

Representativeness Heuristic

We judge things based on their similarity to a prototype. We overestimate the importance of similarity, we ignore relevant information like base rates

Gambler's Fallacy

Belief that in a run of bad luck, you're 'due' for a change.

Anchoring & Adjustment

We start from some reference point (anchor) and adjust it when making a judgement about a quantity/price/numbers

Miscalibration of Confidence

A metacognitive failure more common in System 1 than System 2 thinking.

Expected Utility Theory

When choosing between options, we use the expected utility of the outcomes and their respective probability.

Prospect Theory

Value decisions based on gain vs. loss from our current position. Gains and losses are valued differently

Sunk Costs

We tend to follow through if we've already dedicated significant resources into something, even if costs don't outweigh benefits.

Ex) going to an event even though you don't feel like it anymore, because you bought a ticket

Ex) staying with a partner you don't really enjoy spending time with

Decision Making is Adaptive

Heuristics, biases, and fallacies help us make decisions that are 'good enough' most of the time. They help us make decisions that are "good enough" most of the time, in a way that reduces resources used