Psychology 466: Judgment & Decision Making Psychology 466: Judgment & Decision Making Instructor: John Miyamoto 09/28/2017: Lecture 01-2 Note: This Powerpoint presentation may contain macros that I wrote to help me create the slides. The macros aren’t needed to view the slides. You can disable or delete the macros without any change to the presentation.

Outline General course information Get to know each other Psychology of judgment & decision making – What is it? Background ideas from general cognitive psychology General Information re This Course Psych 466, Miyamoto, Aut '17

General Information Instructor: John Miyamoto Email: jmiyamot@u.washington.edu Office: 215 Guthrie Phone: 206-368-9761 Office hours: Thursday 12:00 - 1:00, Guthrie 215 OR make an appointment (contact by email or phone) UW computing provides me with all student email addresses. Let me know if you use a non-UW email address. Let me know if you are not officially enrolled in this class. Textbooks Psych 466, Miyamoto, Aut '17

Required Textbooks Hastie, R., & Dawes, R. M. (2009). Rational choice in an uncertain world (2nd edition). Amazon Prime Price: $80.77 in paperback. Ebook versions are available. Kahneman, D. (2011). Thinking, fast and slow. Amazon price: $8.86 as a paperback. Ebook versions are available. Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). Smart choices: A practical guide to making better decision. Amazon price: $19.53 as a hardback. Ok to get a used book for $2.00. Gigerenzer, G., & Brighton, H. (2009). Homo Heuristicus: Why biased minds make better inferences. Topics in Cognitive Science, 1, 107- 143. Download as pdf from Psych 466 website. There are ebook versions of these books (Kindle and epub). PDF’s On Psych 466 Website Psych 466, Miyamoto, Aut '17

PDF's for Week 1 Reading Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). Smart choices: A practical guide to making better decisions. pdf: Table of Contents, Preface & Chapter 1 Hastie, R., & Dawes, R. M. (2009). Rational choice in an uncertain world (2nd ed.). pdf: Table of Contents; Chapter 1; Chapter 2; Gigerenzer, G., & Brighton, H. (2009). Homo Heuristicus: Why biased minds make better inferences. Topics in Cognitive Science, 1, 107- 143. pdf available. Kahneman, D. (2011). Thinking, fast and slow. Chapters 1 - 3. **NO PDF FOR KAHNEMAN** PDF’s can be downloaded from the Psych 466 website. Psych 466 Website Psych 466, Miyamoto, Aut '17

Psych 466 Website URL: https://faculty.washington.edu/jmiyamot/p466/p466-set.htm Pdf’s of papers are posted here. Powerpoint lecture slides are posted here. Preview of the next lecture is posted here. Other stuff is posted here. All of this week’s readings are posted on the course website as pdf’s. Reading Assignment for Week 1 - Additional Comments Psych 466, Miyamoto, Aut '17

Reading Assignment for Week 1 Chapters 1 & 2 of Hastie & Dawes (HD). Preface and Chapter 1 of Smart Choices. Gigerenzer, G., & Brighton, H. (2009). Homo Heuristicus: Why biased minds make better inferences. Pages 107 – 110. Kahneman (2011). Thinking, Fast and Slow. Pages 19 – 49. Ch 1: The characters of the story; Ch 2: Attention and effort; Ch 3: The lazy controller Except for Kahneman, all of these readings can be downloaded as pdf's from the course website. A standard view of JDM Applied Decision Making Two Conflicting Views of Heuristic Reasoning Assignments, Exams, Formula for the Course Grade Psych 466, Miyamoto, Aut '17

Assignments and Exams One midterm exam and a final exam. All exams are take-home exams. Exam answers are submitted over the internet. Three short assignments. % Grade Assignments 1, 2 & 3 9 (each) Midterm 36 Final Exam 37 Course Website & Collect-It Website Psych 466, Miyamoto, Aut '17

Collect-It Website Catalyst Collect It website for turning in assignments & exams https://catalyst.uw.edu/collectit/dropbox/jmiyamot/41002 There is a link to Collect It dropbox on the course website. Get To Know Each Other Psych 466, Miyamoto, Aut '17

Get to Know Each Other Introduce yourself. Mention: Your name Your department Why are you studying JDM? What is a Decision? Psych 466, Miyamoto, Aut '17

What is a decision? Discuss Give some examples. Get some examples from the class. What is a Decision? – Some Examples Psych 466, Miyamoto, Aut '17

What is a decision? Major reflective decisions: Low level decisions Whether or not to invest in a stock or business? Whether or not to buy a house? Which house to buy? Similar buying decisions for other major items, e.g., cars, computers, etc. Whether to start a relationship with someone? Whether to end a relationship with someone? Medical decisions – whether or not to have surgery for a problem? Low level decisions Shopping in a supermarket Which way to go when driving a car to a particular location What to wear today Neural decision making (by neural mechanisms in the brain) Why Psych of Decision Making Overlaps So Many Levels of Psychological Theory? Psych 466, Miyamoto, Aut '17

Why Psych of Decision Making Overlaps So Many Levels of Psychological Theory? Math models of decision processes apply to many different types of decisions. E.g., big life decisions, minor everyday decisions, unconscious decisions that are made at the neuropsychological level. Similar issues need to be investigated at different levels. Similar questions are asked at different levels. Major Questions of JDM - What Factors Do or Should Affect a Decision? Psych 466, Miyamoto, Aut '17

What factors DO affect a decision? What factors SHOULD affect a decision? Are there factors that affect decisions even though they should not? Are there factors that do not affect decisions even though they should? Discuss General Description of Factor That Should Affect a Decision Psych 466, Miyamoto, Aut '17

What factors SHOULD affect a decision? Three concrete decision examples: Whether or not to take a particular course. Whether or not to buy a new, better computer. Whether or not to end a relationship with someone. Suppose the relationship has a number of good features but also some bad features. -------------------------------------------------------------------- Continue This Slide Psych 466, Miyamoto, Aut '17

What factors SHOULD affect a decision? Three concrete decision examples: Whether or not to take a particular course. Whether or not to buy a new, better computer. Whether or not to end a relationship with someone. Suppose the relationship has a number of good features but also some bad features. -------------------------------------------------------------------- FACTORS What you want. Also, what you want to avoid. How you feel about different ways the decision could turn out. How strong are your preferences (and dislikes) for particular outcomes? What factors or events will affect whether the outcome will be good, mediocre or bad, and to what degree? How likely are the different possibilities? Normative Decision Analysis – What Is It? Psych 466, Miyamoto, Aut '17

Normative Decision Analysis Enumerate outcomes Enumerate options Construct a decision analysis for the decision Evaluate the probabilities of different outcomes Determine which option has the greatest "expected utility." What Are Typical Characteristics of Human Decision Making? Psych 466, Miyamoto, Aut '17

What Are Typical Characteristics of Human Decision Making Usually not analytic. Difficulty integrating feelings and thoughts (affect and cognition). Fast. Reasonably accurate. Difficulties with complex information. Cognitive factors, e.g., limited memory, limitations on speed of mental processing, limitations on available effort, .... This course will help you be a better decision maker, especially for careful, reflective decisions. History of the Psychology of Decision Making Psych 466, Miyamoto, Aut '17

History of the Psychology of Decision Making Victorian rationality, Freudian irrationality, behaviorist arationality. Expected utility theory (Von Neumann & Morgenstern, 1944) Rational agent model of economic behavior Heuristics and biases movement, 1970 – 1990 (approx.) Reactions to heuristics and biases movement Evolutionary psychology, ecological psychology, naturalistic decision making, Bayesian models of psychological processes Psychology of happiness Separate development – neuroscience of decision making (current hot topic!) The Cognitive Approach to Judgment & Decision Making Psych 466, Miyamoto, Aut '17

Thursday, September 28, 2017: The Lecture Ended Here Psych 466,, Miyamoto, Aut '17

Cognitive Approach to Judgment & Decision Making (JDM) Cognitive limitations – limitations on human cognitive capacity affect judgment and decision making Heuristics and biases movement: 1970 – 1990 (approx.) Reactions to heuristics and biases movement Evolutionary psychology Ecological psychology Naturalistic decision making Bayesian models of psychological processes Emotion in decision processes The Standard Memory Model Psych 466, Miyamoto, Aut '17

Working Memory (WM) Has Severe Capacity Limitations WM can only hold a limited number of "chunks" of information. When information is complex, people are forced to simplify the reasoning process. Simplifications can lead to distortions. EXCEPTION: With experience, one can learn to integrate complex information into a small number of "chunks." Example: Expert chess players can reason about complicated chess problems. Example: Experienced drivers can understand traffic situations that are actually very complex. Chunking depends on automatic processes: Automatic processes - low cognitive demands Controlled processes - high cognitive demands Psych 466, Miyamoto, Aut '17 Same Slide but with Additional Comment re the Role of Attention

WM Has Severe Capacity Limitations (cont.) Limited WM implies that attention plays a central role in cognition. Misallocation of attention can lead one to overlook important relevant info. Complex information processes have many points at which cognitive limitations can exert an influence. Psych 466, Miyamoto, Aut '17 Where Are We in this Lecture?

Where Are We in the Lecture? Normative and prescriptive decision models require complex representations and processing. Cognitive limitations cause us to simplify decisions, and this can produce errors. NEXT: How to Deal with Cognitive Complexity Intuitive judgment versus statistical models Brunswik’s Lens Model of Human Judgment Linear models applied to making better choices Applications to clinical judgment Intuitive Judgment vs Actuarial Judgment Psych 466, Miyamoto, Aut '17