cog 3/6

Lecture 3/6 

Decision making 

Science and education - protests 

• Federal research grants - all funded by 2 agencies 

• Grants come w 2 kinds of money - 

  • Indirect costs - ethics board money, boats for research 

  • In US - most profs write papers to get grants for research 

• Budget cuts completely 

  • Big cuts to NIH 

  • All money frozen 

  • Many labs are closing down 

Judgment and decision making 

• Ppl draw conclusions from the evidence they encounter 

• System 1 - surface level decision making 

• Person A - using copier 

• Person B - requests to use the copier to make a small number of copies - request phrased as follows: 

  • Excuse i have 5 pages … 

    • Bc im in a rush 

    • Bc i have to make copies 

    • May i use the copy 

• If u give ppl a reason why u need to use the copy machine more ppl agreed to let other ppl use the printer 

  • Pretending to have a surface level processing reason gives ppl a reason 

• System 1 - intuitive, automatic, unconscious, fast, frequent, emotional, error prone 

• System 2 - effortful, logical, analytic, calculating, conscious, infrequent 

• Heuristics - mental shortcuts 

Real world implications 

• Many judgments begin w frequency 

• Should i do X or Y - often amounts to does X or Y usually result in a better outcome 

• The decisions we make is about how often we do things

  • Roommate and relationship fights (you always or you never) 

  • Ppl planning (policy and individually) consistently overestimate dramatic risks while underestimating common risks 

• How often does one thing happen? 

  • Many judgments begin with frequency ex - an assessment of how often an event has occurred in the past 

    • Should I do X or Y 

    • Does X or Y usually result in a better outcome 

    • Should I worry abt X? - often amounts to how often does X really happen 

• Roommate and relationship fights (ex - you always.. & you never) 

• Ppl planning (policy and individually) consistently overestimate dramatic, vivid risks while underestimating common risks 

• Lots of evidence doctors over diagnose things they have recently encountered compared to genuinely more common things 

• Decisions abt vaccination are about relative risk aka frequency of certain events which are widely misunderstood 

• Many aspects of our life - is abt how often do certain things or events happen 

Thinking of heuristics not as flaws but as shortcuts that usually work well, like cognitive illusions 

• availability heuristic - more recent events influence decisions more 

  •  recent and more easily remembered info often should influence decisions more 

  • Witnessed a crocodile attack yesterday? Avoid that river today! – there was a croc attack yesterday so now it is more likley to have an attack today too 

  • Memory favors emotional and vivid events bc theyre more likely to be survival relevant 

  • Only becomes maladaptive in modern info environments (new, social media) 

Base rate neglect - 

• Specific info often overrides general statistics in immediate, natural contexts 

• Knowing the average bear is docile doesnt help if this bear is charging at you 

• Becomes problematic in modern contexts where statistical thinking is crucial (medical diagnoses, financial planning, evaluating news) 

• U need the average over time 

Improving your decision making 

• Making it more concrete, less abstract reliably improves performance 

• Classic version - there is about 6% chance that a woman without cancer will receive a positive mammogram 

• Twice as many ppl get it right - about 6% of those without cancer have a dense but harmless cyst - looks like a cancerous tumor on the X ray and thereby results in a positive mammogram 

  • Switch from thinking abt probability to large samples 

  • Single event probabilities - if u switch it and describe original problem - there are 1,000 women w cancer, 800 will receive a positive mammography 

  • 46% of undergrads reason correctly 

• How to improve decision making: rely on others independent opinions 

  • Wisdom of crowds - in 1906 galton visited a livestock fair and stumbled upon a contest 

  • Ox was on display and villagers were invited to guess the animal’s weight 

  • 787 ppl guessed the weight of ox 

    • Some were experts like farmers 

    • Some guessed high others guessed low but many guessed sensibly 

  • Other than rely on your own opinions → rely on other people’s opinion too 

• Average guess - 1,197 pounds 

• Correct guess - 1,198 pounds 

  • Now a very large literature on wisdom of crowds 

  • If error is not systematic but just random it averages out 

  • Ppl are unsure but not systematically biased, decision making is massively improved by using multiple ppl’s independent guesses 

  • Ex - taking into account other ppl’s thoughts without biasing them first by telling them your thoughts 

The wisdom of crowds 

• 2008 UCSD - what if i dont have 500 friends to ask about every decision i make? 

• Measuring the crowd within - we have a crowd within all of us 

  • The crowd within u - do we have ppl inside our head? - asked ppl some trivia questions: 

    • What percentage of the world’s airports are in the US? - 30% 

    • What percentage of the world’s roads are in india? - 10% 

      • Give me 2 diff answers 

  • Calculated error - more error is bad 

    • Two guesses and calculate the average of two guesses 

    • Immediate condition - how much error there was 

    • You were better off answering that question - calculate average of two answers 

      • If u wait 3 weeks - u can ask yourself the same question and take the average of the 2 answers 

Improve your decision making: avoid deciding based on anticipated regret 

• Stumbling on happiness book - we are so bad at predicting what makes us happy 

• A lot of decision making is based on regret 

• Who is happier 1 year later: someone who won lottery today or someone who became paraplegic today? 

  • Both lottery winners and paraplegics were as happy as each other 

  • Their happiness levels reverted back to before they won lottery and before they became paraplegic 

Avoid second guessing 

• Students took a photography class 

• Throw one pic away 

  • Image they did not pick was destroyed 

  • How happy are u w pic u chose? 

    • In condition where they could change their mind - they were happier 

    • In condition where they could not change their mind - they were not as happy 

Make nudges 

• Teaching ppl info - does nothing for decisions 

• Reducing friction for things that u do want ppl to make is better that helps ppl not make certain decisions 

• Default choices - organ donation 

  • Organ donation - saves many lives 

  • If u change organ donation - opt in - i want to do that (higher percentage of donors) 

  • U click a button that says i do not want to to do that 

• Default effects - are seen as what should be the correct answer 

  • Behavioral nudges

  • Friction - choosing say no feels wrong 

• Small nudges work well 

• Behavioral nudges - not show up for court are sent to prison indefinitely 

  • Highlighted what time in court they were supposed to be there - reduced failure to show up to 20%, prevented 30K ppl from being arrested in 3 years 

• Buy now, pay later 

  • Retirement savings or new clothes 

  • 40% of u chose to have 100 now instead of in a month - u agree to a 213% credit card APR 

  • Ppl dramatically underweighing themselves 

    • Truth is not 50% in a month 

    • Used all over cog psychology 

    • How much ppl are willing to discount your future self 

• Measure of impulsiveness 

  • Temporal discounting 

  • Making decisions to buy clothes now vs later 

  • U can reduce your own temporal discounting - by episodic future simulation - visualize yourself in the future in a specific scenario 

  • Varies a lot between ppl 

• Cog psych - explain biases and heuristics - thinking more concretely 

  • Not trying to stimulate happiness and regret - make decisions based on other ppl and nudging yourself 

Deduction and confirmation bias 

• Deductive reasoning - deduction - going from general laws to particulars 

• Every UCSD undergrad is smart 

• Mary a a UCSD undergrad 

• Therefore mary is smart 

Is this syllogism valid? 

• All P are M 

• All S are M

• Therefore all S are P  

Better in concrete terms 

• All plumbers are mortal 

• All killers are mortal 

• Therefore all killers are plumbers 

• Logical form of both of these - easy to reject the concrete one 

  • Most common way ppl are bad at reasoning 

Ppl are poor at logic intuitively 

Which cards do you need to flip over? 

• If a card has a vowel on one side, then it has an even number on the other side 

• Should i flip over E, J, 6 or 7 

• Correct answer is u have to flip over E and 7 

• Common answers - E, or E and 6 

• J does not have a vowel 

  • 6 feels really tempting 

  • 7 is actually critical 

  • We disconfirm the rule 

  • Evidence the rule is not true 

Confirmation bias 

• We look for evidence that confirms what we believe and overlook evidence that could disconfirm what we believe 

• E - can confirm or disconfirm, so doubly informative 

A quick puzzle to test your problem solving 

• Numbers they give as an example - doubling even numbers 

• Anything else - sequencing of doubling numbers are true 

• U could have entered pi 

  • 4.5 times more green than red 

  • Nobody answered a number that was an integer 

  • 95% of u entered in increasing integers 

• Confirmation bias - we look for info that is consistent with what we think

Diff card game 

• Age on one side and drink on other side 

• If u have a beer card, u must be 21 or older 

• Cards - 24, beer, 18, and cola 

  • It doesnt matter what the 24 year old drinks 

Confirmation bias - not deeply based on logic 

• Framing effects and prospect theory - making choices under uncertain conditions 

• Which bet would u prefer - 

  • 4% chance of 5 million dollars (most ppl choose this one) 

  • 5% chance of 2 million dollars 

80% chance of 5 million 

100% chance of 2 million (this one is chosen most) 

78% chance of 5 million 

98% chance of 2 million (this one is chosen most) 

• Prospect theory 

  • How much ppl prefer or like something is not based on the value, they internally assign to an amount of money (or some other good) is not equivalent to the monetary value 

    • How much someone likes something is just based on what the subjective utility of the item is 

    • Subjective utility - differs from actual value in key ways 

    • Each additional dollar added feels less valuable and losses loom larger than gains 

• Do i like something because it is expensive or do i like something because it is very useful 

  • People usually like things more if they can use it well 

Think about how much you like something - i like it more and i hate it more is down 

• Taking away 100 dollars is not half as bad as taking 200 dollars from someone 

• Diminishing returns - additional gains (or losses) are not valued as much as early gains or losses 

• Your first 100 dollars feels real good 

• Second 100 dollars feels less good 

• Loss aversion - the loss part is much steeper 

• Would you take ab bet where if a coin comes up heads, i give you 100 dollars but if it comes up tails, you give me 100 dollars 

• Losing 100 dollars sucks 

• Sucks more to lose 100 than to gain 100 

• Losses are worse than gains 

Framing effects 

• Imagine the US is preparing for the outbreak of an unknown disease, expected to kill 600 people 

  • If program A is adopted, 200 people will be saved - 72% preference 

  • If program B is adopted, there is one third probability that 600 people will  be saved and two thirds probability that no people will be saved - 28% 

• Ppl are risk averse in one situation and risk taking in another 

• One third of big blue bar - one third chance of this 

• Losing 400 ppl is worse then ⅓ of no one dying 

• You can take exact situation and flip losses to gains 

• Some ppl will talk abt things solely in gains or losses 

• Commonly thought about idea 

• People are more willing to take losses than bets - more willing to do risky things 

• Correct truth - especially with money - perfectly straight line is the truth - $5 is $5 

• Would you walk 20 min across campus to get a free burrito - yes 

• Would you drive 20 min to another car dealership to get $10 off of the same car 

• Prospect theory - the way we actually feel about things - depends on starting point and depends on how big it is in a nonlinear way 

• If this describes behavior - it should be the proofs of these 

• Framing effects - u can flip things from losses to gains 

• Does this subjective utility make any sense? 

  • We are willing to accept smaller gains instead of risks for bigger gains 

  • Does being risk averse make any sense? - 

    • Imagine you are an animal looking for food 

    • Animal makes many independent choices with uncertain outcome 

    • Some riskier than others 

    • Survival threshold - if we repeatedly make risky choices and get no food - are bad decisions 

    • On average - we make conservative decisions - we tend to be too conservative 

Framing effects as rational? 

• There are 600 total things 

• An object or event is judged more favorably when described in the positive frame than negative frame (ex - we prefer 200 will be saved instead of choosing 400 will be killed) 

Pragmatics involved in framing an interaction 

• I met anna kendrick last weekend and we sang a duet 

• Anna kendrick met me last weekend and we sang a duet (i think i am someone important) 

  • If u look at how ppl frame things - it is always informative 

• Glass half full OR glass half empty 

• Often the speakers’ choice of framing (their sentences) contain implicit pragmatic information 

  • Maybe framing effects are a reasonable inference in a social world 

  • Pragmatics can still be used against us because people decide how they want to frame certain things 

• This does not mean things are not irrational in some way or another 

  • The speaker can convey info to you 

  • Effects decisions to you 

  • We’re making objectively different decisions 

Decision making - two systems 

• System 1 (intuition) - fast, automatic, frequent, emotional, stereotypic, subconscious, impervious to verbal instruction, heuristic based 

• This is what people use most of the time and is considered the default mode 

• System 2 (reasoning) - slow, effortful, infrequent, logical, calculating, conscious, requires working memory, basis of intelligence 

• Comes in when decisions or actions become complex and need attention with a feeling of concentration 

• We can engage in more complicated thinking