Cognitive Approach to Thinking and Decision-Making

COGNITIVE APPROACH TO THINKING AND DECISION-MAKING

• William Shakespeare's Thought: "There is nothing either good or bad, but thinking makes it so."

THINKING MODELS

• Types of Thinking:

  • Rational
  • Intuitive

• Key Concepts:

  • Heuristics: Mental shortcuts for decision-making.
  • Framing: Presentation of information affecting choices.
  • Appraisal: Assessing significance of events.
  • Loss Aversion: Preference for avoiding losses over equivalent gains.

• Dual Process Models:

  • System 1: Fast, intuitive thinking.
  • System 2: Slow, rational thinking.

RELATIONSHIP BETWEEN THINKING AND DECISION-MAKING

• Thinking is integral to decision-making, influenced by concepts, processes, and individual goals.
• Decision-making involves choosing from various options, heavily linked to personal thought processes.

AVERAGE DECISIONS MADE DAILY

• Adults make about 35,000 choices per day, including 122 informed decisions; many change their minds frequently.
• Specific daily choices: 227 related to food (Wansink & Sobal, 2007).

TYPES OF THEORIES ON THINKING

• Normative Theories: Prescribe how decisions should be made rationally.
• Descriptive Theories: Describe how decisions are actually made, acknowledging biases and heuristics.

DUAL PROCESS THEORY (Kahneman, 2011)

• System 1 (Intuitive):
  • Characteristics: Fast, automatic, subconscious.
  • Uses: Heuristics, influenced by emotions.
  • Example: Instant gut feelings about people.
• System 2 (Rational):
  • Characteristics: Slow, deliberate, requires effort.
  • Uses: Analytical thinking for complex decisions.
  • Example: Detailed comparison of product reviews.

RESEARCH EVIDENCE

• Studies suggest System 1 often leads to better decisions due to efficient information organization in memory.

KEY STUDIES

• Atler & Oppenheimer (2007): Cognitive Reflection Test given in different fonts resulted in better performance in hard-to-read font, indicating slower System 2 engagement.
• Dijksterhuis (2004): Unconscious thought led to better decision-making outcomes compared to immediate or conscious thought.
• Kruger et al.: Used effort judgments to depict how perceived effort influences quality evaluation.

EVALUATION OF DUAL PROCESS THEORY

• Distinction between Systems 1 and 2 is well-supported but conceptual; actual decision-making involves various brain areas.
• Not all researchers agree with the dual system model; alternative models suggest more frameworks.

HEURISTICS AND BIASES

• Heuristics simplify decisions but can lead to biases.
• Different types include:
  • Availability Heuristic: Choices based on recent memories.
  • Anchoring Heuristic: Expectations shaped by initial information.
  • Effort Heuristic: Quality judged by perceived effort.
  • Scarcity Heuristic: Rarity increases perceived value.

FRAMING EFFECT

• Decisions change based on positive or negative presentation of information.
• Tversky & Kahneman (1981) demonstrated framing effects in decision-making scenarios, influencing choices based on how options are framed.

LOSS AVERSION

• Preference to avoid losses over seeking equivalent gains, with psychological pain from losses significantly outweighing pleasure from gains.

APPRAISAL

• Evaluative process assessing personal significance of situations affects decision-making.

APPRAISAL VS. HEURISTICS

• While heuristics serve as shortcuts, appraisals involve deeper evaluations and can also influence heuristic use in decision-making processes.