L2: Making Judgements

Outline of Key Concepts

• Heuristics and Biases
  • Introduced by Tversky & Kahneman.
  • Types include Representativeness, Availability, Anchoring.
  • Discusses Gigerenzer’s Adaptive Toolbox.
  • Explores Recognizing Patterns and Making Predictions.

Making Judgements

• Traditional View: Judgments based on probability, costs, benefits, and logic.
• Kahneman & Tversky's View: We often use heuristics, which are mental shortcuts that simplify decision making.
  • Can lead to biases, defined as systematic errors in judgment.

Intuition vs Logic

• Two Systems:
  • System 1: Intuitive, fast, uses heuristics.
  • System 2: Slow, deliberate, uses analytical reasoning.

Heuristics and Biases

• Representativeness Heuristic: Judging probabilities based on how much a particular event resembles typical cases.
• Availability Heuristic: Estimating likelihood based on how easily examples come to mind, which can be influenced by personal experiences.
• Anchoring: The tendency to rely heavily on the first piece of information encountered (the "anchor") when making decisions.

The Linda Problem

• Example: Describes Linda, a 31-year-old with specific characteristics, and presents various professions to assess people’s judgments about her likelihood to perform those jobs.
• Conjunction Fallacy: Many judge that it’s more probable that Linda is both a bank teller and a feminist than just a bank teller, demonstrating a misunderstanding of probabilities.

Base Rate Neglect

• Ignoring the base rate (the general prevalence of a characteristic) in favor of specific information that seems more representative.
• Example: Taxi cab problem demonstrates how people misunderstand the probability of being involved in an incident based on witness testimony versus actual statistical likelihoods.

Availability Heuristic in Practice

• Factors influencing perceptions of risk (e.g., which causes of death people consider more likely).
• Carroll (1978): Used imagination to increase the availability of an event which leads to higher assessments of its likelihood.

Anchoring and Adjustment

• Initial information acts as an anchor influencing subsequent judgments and estimations. This can skew judgments due to insufficient adjustments from the anchor value.

Recognition Heuristic

• Goldstein & Gigerenzer (2002): Suggests that people often choose recognized options over non-recognized ones, which can lead to correct decisions in some contexts.

Rationality and Judgment

• Kahneman & Tversky: Heuristics lead to irrational judgments.
• Gigerenzer: Highlights that we possess an adaptive toolbox consisting of efficient heuristics that help solve real-world problems effectively.

Predictions and Patterns

• Misjudging randomness through perceived patterns in random sequences (e.g., gambling and sports outcomes).
• Gambler's Fallacy: The belief that past events affect future probabilities in independent random sequences, such as coin tosses or roulette.

iPod Shuffle Example

• Discusses perceptions of randomness in iPod music shuffling, leading to theories about the randomness and the design behind it.

Summary of Findings

• Humans prefer to apply heuristics for quick judgment, using them to make predictions under uncertainty. This can lead to the misjudgment of probabilities and patterns.