1. Decision Making ET 305, Spring 2016
Instructor: Dr. Lu Yuan, CSP
Phone:

2. Review: Cognition Four factors of selective attention
Three perceptual processes
Limits of working memory
Long-term memory
Basic mechanisms
Organization of information
Situation awareness and time-sharing
Human factors design implications

3. Information Processing Models
Wickens, C.D. (1992) Engineering Psychology and Human Performance, 2nd Edition. New York: Harper Collins.

4. Decision Making Basics
We use different decision processes depending on the situation.
In class, we will discuss three major classes of decision making models:
Optimal model based on expected value,
Information processing model that highlights heuristics and biases, and
A model that addresses the context in which decisions are made in natural environments.

5. Definition of Decision Making
It is a task in which:
A person must select one option from a number of alternatives,
There is some amount of information available with respect to the option,
The timeframe is relatively long,
The choice is associated with uncertainty or risk.

6. Three Phases of Decision Making
Acquiring and perceiving information or cues relevant to the decision.
Generating and selecting hypotheses or situation assessments about what the cues mean, regarding the current and future state relevant to the decision.
Planning and selecting choices to take, on the basis of the inferred state, and the cost and values of different outcomes.

7. Decision-Making Models
Normative decision models: Identifying the best decision to take, assuming an ideal decision maker who is fully informed, able to compute with perfect accuracy, and fully rational.
Descriptive decision models: Describing what people will actually do.

8. Normative Decision Model
Utility: The overall value of a choice, or how much each outcome or product is “worth” to the decision maker.
Multiattribute utility theory: Assumes all outcomes are certain
The number of potential options
The number of attributes or features that describe each option
The difficulty in comparing alternatives on very different dimensions

9. Multiattribute Utility Theory: An Example of Car Purchase

10. Normative Decision Model
Expected value theory: Assumes that the overall value of a choice is the sum of the worth of each outcome multiplied by its probability, e.g.:
Winning $50 with a probability of 0.20, or
Winning $20 with a probability of 0.60.
Subjective expected utility (SEU) theory:
Subjective probability times value of each outcome
However, the value component is subjective, determined for each person

11. An Example of SEU Theory

12. Descriptive Decision Model
Satisficing (Simon, 1957):
People do not usually follow a goal of making the absolutely best or optimal decision.
Instead, they opt for a choice that is “good enough” for their purposes, something satisfactory.
The decision maker generates and considers choices only until one is found that is acceptable.

13. Naturalistic Decision Making: An Example of Fighting a Forest Fire

14. Heuristics and Biases Heuristics: Rules-of-thumb
Usually very powerful and efficient
But they do not always guarantee the best solution
Occasionally lead to systematic flaws and errors
Biases: Systematic flaws that represent deviations from a rational or normative model

15. Information-Processing Model of Decision Making

16. Information Processing Limits in Decision Making
Cue reception and integration
Hypothesis generation and selection
Plan generation and action choice

17. Heuristics and Biases in Receiving and Using Cues
Attention to a limited number of cues
Cue primacy and anchoring: Information processed early is often most influential
Inattention to later cues
Cue salience
Overweighting of unreliable cues

18. Heuristics and Biases in Hypothesis Generation, Evaluation and Selection
Generation of a limited number of hypothesis
Availability heuristic
Representativeness heuristic
Overconfidence
Cognitive tunneling
Confirmation bias

19. Heuristics and Biases in Action Selection
Retrieve a small number of actions
Availability heuristic for actions
Availability of possible outcomes
Hindsight bias: Monday Morning Quarterback
Framing bias

20. Dependency of Decision Making on the Decision Context
To the extent that people have the appropriate resources and can adapt them, they make good decisions.
Skill-, rule-, and knowledge-based behavior
Recognition-primed decision making

21. Skill-, Rule-, and Knowledge-Based Behavior

22. Skill-, Rule-, and Knowledge-Based Behavior
People who are extremely experienced with a task tend to process the input at the skill-based level.
People who are familiar with the task but do not have extensive experience tend to process input and perform at the rule-based level.
When the situation is novel, decision makers do not have any rules stored from previous experience to call on. They therefore have to operate at the knowledge-based level, which is essentially analytical processing using conceptual information.

23. Recognition-Primed Decision Making
Three critical assumptions:
Experts use their experience to generate a plausible option the first time around.
Time pressure should not cripple performance because experts can use rapid pattern matching.
Experienced decision makers know how to respond from past experience.

24. An Integrated Model of Decision Making

25. Factors and Limitations Affecting Decision Making
Inadequate cue integration
Inadequate or poor-quality knowledge in long-term memory
Tendency to adopt a single course of action and fail to consider the problem space broadly, even when time is available
Incorrect or incomplete mental model

26. Factors and Limitations Affecting Decision Making
Working-memory capacity and attentional limits
Poor awareness of a changing situation and the need to adjust the application of a rule
Inadequate metacognition leading to an inappropriate decision strategy for the situation
Poor feedback regarding past decisions

27. Improving Decision Making
Task redesign
Decision-support systems
Training

28. Decision-Support Systems
Two design philosophies:
Cognitive prostheses: Eliminating the defective or inconsistent decision making of the person
Cognitive tools: Providing useful instruments to support adaptive human decision making

29. Decision-Support Systems
Typical types:
Decision matrices and trees
Spreadsheets
Simulation
Expert systems
Displays

30. Training Typical approaches:
Teaching the analytical, normative utility methods for decision making
Counteracting specific types of bias
Allowing the natural use of various strategies
Metacognition