Judgments and Decisions Psych 253 Multi-attribute Decisions (often “riskless” decisions) Job example Introducing uncertainty to the mix

1.Defining the problem 2.Setting goals and choosing frames 3.Gathering information 4.Identifying options 5.Assessing the pros and cons of the more attractive options 6.Applying the criteria for selection 7.Selecting a preferred course of action 8.Implementing the decision and adjusting if necessary 9.Monitoring results and revising as needed

From the trivial to the crucial Deciding where to go to lunch Deciding what summer job to take Deciding what career to pursue Deciding which medical treatment to get Deciding where to build a nuclear power plant Deciding what programs to fund Deciding how to jumpstart the economy

Knowing what you care about and knowing your priorities when there are multiple concerns 1. Defining the problem

2. Setting goals and choosing frames 1.Identifying Objectives 2.Structuring Objectives into a Hierarchy 3.Specifying Attributes to Measure the Degree to which each Objective is Achieved 4.Quantifying Values for Levels of Attributes 5.Combining Attributes into a Multi-Attribute Value Function

Considering multiple reference points and multiple perspectives on the problem Take an inside and outside view

3. Gathering information What is the greatest danger to good information gathering? Not insufficient time, but our own mental biases and distortions; the inability to know what we need to know.

4. Identifying options What are the ways to treat my cancer? Which job offers should I seriously consider? Where could we go on a vacation?

5. Assessing the pros and cons of the more attractive options Identify Objectives Specify Attributes to Measure the Degree to which each Objective is Achieved Quantify Values for Levels of Attributes

5 jobs Salary Vacation Days Opp for Advancement Co- WorkersLocation A$50,0002 weeksGood LA B$60,0003 weeksGreatPoorLA C$60,0002 weeksSomeTerrificNY D$60,000BirthdaySomeOkIowa E$40,0001 weekNot MuchPoorLA

Salary Vacation Days Opp for Advancement Co- WorkersLocation A$50,0002 weeksGood LA B$60,0003 weeksGreatPoorLA C$60,0002 weeksSomeTerrificNY 1073 D$60,0002 daysSomeOkMidwest E$40,0001 weekNot MuchPoorLA 02006

Salary Vacation Days Opp for Advancement Co- WorkersLocation A$50,0002 weeksGood LA B$60,0003 weeksGreatPoorLA C$60,0002 weeksSomeTerrificNY D$60,0002 daysSomeOkMidwest E$40,0001 weekNot MuchPoorLA

Salary Vacation Days Opp for Advancement Co- WorkersLocation A$50,0002 weeksGood LA B$60,0003 weeksGreatPoorLA C$60,0002 weeksSomeTerrificNY D$60,0002 daysSomeOkMidwest E$40,0001 weekNot MuchPoorLA

5. Applying criteria for selection Minimize Time? Minimize Cost? Minimize Risk? Maximize Safety Maximize Performance? Usually involves determining the relative importance of these variables

6. Selecting a preferred course of action Based on sound reasoning Based on combinations of information, beliefs, and values

7. Implementing the decision and adjusting if necessary A commitment to following through. Might mean time, energy, resources, social embarrassment, peer pressure, risk, or uncertainty.

8. Monitoring results and revising as needed Looking back and asking yourself, “What would I have done differently?” Learning from experience

The Summer Job With two job offers in hand, Sam was uncertain about what to do. One job was an assistant at a local gardening business. The job would pay $20.50 per hour, require 30 to 40 hours per week, and hours would be primarily during the week, leaving the weekends free to spend with friends. The job would last for 3 ½ months (14 weeks), but the exact number of hours was uncertain.

The second job was to work as a member of a trail maintenance crew for the Sierra Club. The job would require 10 weeks of hard work, 40 hours per week at $25 per hour, in a national forest in a neighboring state. The job would involve extensive camping and backpacking. Members of the maintenance crew would come from a large geographical area and spend the entire 10 weeks together, including weekends. Although Sam had no doubts about how much he would make, he didn’t know if he would like the people. 10 weeks together could mean anything.

What are Sam’s objectives? How can he measure them?

5 = Large, congenial group with many new friends. Work is enjoyable, and time passes quickly 4 = Small, congenial group. Work is interesting, and time off is spent with a few friends doing enjoyable things. 3 = No new friends. Leisure hours are spent with old friends doing typical things. Pay is fair for the work done.

2 = Work is difficult. Coworkers complain about the low pay and poor conditions. On some weekends, it is possible to spend time with a few friends, but other weekends are boring. 1 = Work is extremely difficult and conditions are poor. Time off work is boring because outside activities are limited or no one is available.

5 40 hrs Sierra Club Job Gardening Job hrs 30 hrs Salary Fixed Enjoyment Known

Sierra Club Job Salary = $23 per hr X 40 hrs per week X 10 weeks = $9200 Gardening Job Salary If 30 hrs, $20.50 X 30 hrs X14 weeks = $8,610 If 35 hrs, $20.50 X 35 hrs X 14 weeks = $10,045 If 40 hrs, $20.50 X 40 hrs X 14 weeks = $11,480 Expected Salary =.35 * * * = $9758

FunSalary Sierra Club5$9,200 4$9,200 3$9,200 2$9,200 1$9,200 Gardening3$8,610 3$10,045 3$11,480

w=.4w=.6 FunSalary Sierra Club Gardening

Expected utility for Sierra Club job =.10* * * * *45 = 66 Expected utility for Gardening Job =.15* * *84 = 70.5

Even Hamlet could have used decision analysis.... Bear whips and scorns of time Oppressor’s wrong Proud man’s contumely Pangs pf dispriz’d love Law’s delay Insolence of office Spurns that patient merit of the unworthy takes Bear the ills we have Suffer the slings and arrows of Outrageous fortune Take arms against a sea of troubles Not Dream End the heartache and the thousand Natural shocks that Flesh is heir to; a Consumption devoutly To be wished Ills we know not of To be Not to be