Decision Wk 2: Heuristics and Biases (Part 1)

Judgement definition

The process of forming an opinion or evaluation by discerning and comparing

Types of judgments in the book

Estimating frequencies, probabilities and a known value. Evaluating a target qualitatively and quantitatively

Computer science way of describing a heuristic

An algorithm is a method for reliably achieving some goal

Law of small numbers

Cognitive bias where people mistakenly believe that small samples are representative of the larger population.

… sample reduces noise (small or large)

large

Controversy in priming research due to law of small numbers

small samples used: more extreme results

Anchoring and adjustment

Anchoring on a salient number, adjust the number up and down

Why do people overestimate conjunctive probabilities

People tend to overestimate conjunctive possibilities (the likelihood of multiple events all happening together) because they focus on the individual likelihood of each event and underestimate the compounding improbability of all events occurring simultaneously. For example, they might overestimate the chance of successfully completing a series of dependent tasks because each task seems plausible on its own

People underestimate disjunctive probaobilities

Conversely, people underestimate disjunctive possibilities (the likelihood of at least one of several events happening) because they focus on the low probability of each individual event and fail to consider how the overall probability increases when multiple events are considered together

Lottery 6 tries, p(succes) = 0.20. What is the probability of winning the lottery once?

p(Win once | Lottery) = 1 -p(never win|Lottery) = 1 - 0.8^6 = 0.74

Birthday paradox

Probability phenomenon where, in a group of just 23 people, there is about a 50% chance that two individuals share the same birthday. Despite seeming unlikely due to the large number of possible birthdays (365 days), the paradox arises because the number of possible pairings in a group grows rapidly, leading to a surprisingly high probability of a shared birthday.

Implicit anchoring

Anchor comes from your own cognitive processes

Explicit anchoring

Being primed by a previous question

Selective accessibility

Cognitive process where exposure to an initial reference point or anchor makes related information more accessible in memory, influencing subsequent judgments