1. Decisions, Judgements and Reasoning
Cognitive Psychology
Chapter 11b
Decisions, Judgements and Reasoning

2. Outline 4/21/2017 Decisions Study Questions.
Availability Heuristic
The simulation heuristic
Counterfactual thinking
The hindsight bias
Anchoring and adjustment
Framing Effects
Study Questions.
• What is loss aversion. Describe the effect of combining framing effects with loss aversion.

3. Decisions Algorithms and Heuristics The Availability Heuristic
Our estimates of how often things occurs or are influenced by the ease with which relevent examples can be remember
This leads to a number of biases
1) Which is a more likely cause of death in the United States: being killed by falling airplane parts or being killed by a shark?
2) Do more Americans die from a) homicide and car accidents, or b) diabetes and stomach cancer?
3) Which claims more lives in the United States: lightning or tornadoes?

4. Decisions Algorithms and Heuristics The Availability Heuristic
Important factors affecting saliency
Factors that effect the ease of remembering
Vividness, recency, familiarity
Saliency ‘Contaminants’
• Vividness
• Recency
• Familiarity
True
Frequency
Availability
Estimated

5. Decisions Algorithms and Heuristics The Availability Heuristic
Vividness
E.g., Gardening and the full moon.
Repetition
MacLeod & Campbell (1992)
• Recall happy/sad events from one’s past
• Higher estimates of happy events in the future for ‘happy’ group
Imagining
Kahneman & Tversky (1973)
• Imagining Jimmy Carter or Gerald Ford as President

6. Decisions Algorithms and Heuristics The Availability Heuristic
Recency
Pauker & Kopelman (1992)
New England Journal of Medicine -
• Physician reluctant to perform a procedure because of a recent complication

7. Decisions Algorithms and Heuristics The Availability Heuristic
Familiarity
Physicians ratings of likelihood of fatality of various diseases
Correlated with number of articles published about the disease
…. Regardless of what the article said about the disease
Role of media
Population estimate of El Salvadore -> 12 million (5 actual)
Population estimate of Indonesia -> 19.5 million (180 actual)
Who has a larger population, Afghanistan or Iraq?

8. Decisions Algorithms and Heuristics The simulation heuristic
Forecasting how some event might have turned out under another set of circumstances
Mr. Tees and Mr. Crane
E.g.,Medvec et al. (1995)
Examined tapes of 41 athletes from ‘92 Games
Judges rated athletes on scales from “agony” to “ecstasy”
Bronze medalists happier than silver medalists
Counterfactual thinking
Undoing heuristic

9. Decisions Algorithms and Heuristics The hindsight bias
I-knew-it-all-along phenomenon
Anchoring and adjustment
Determine the following:
8 X 7 X 6 X 5 X 4 X 3 X 2 X 1
1 X 2 X 3 X 4 X 5 X 6 X 7 X 8
Kahneman and Tversky found
1) 2,250
2) 512
(Actually: 10,320)

10. Decisions
Government cutbacks are about take a hit on students. It is expected that 600 people will lose their bursaries. The student union has proposed two alternative programs to fight the cutbacks:
If Program A is adopted, 200 students will have their bursaries saved.
If Program B is adopted (a legal option), there is a one-third probability that 600 students will have their bursaries saved, and a two-thirds probability that no students will have their bursaries saved.
Which program would you favour?

11. Decisions The framing effect (Kahneman & Tversky)
The wording of question in conjunction with the background context can influence the decision.
Both of the previous plans were rejected, consider the following:
If Plan C is adopted, 400 people will lose their bursaries.
If Plan D is adopted, there is one-third probability that nobody will lose their bursary, but a two-thirds probability that 600 people will lose their bursary.
Kahneman & Tversky’s results (disease outbreak)
Plan A
1/3 Saved
Plan B
P=1/3 Saved
Plan C
2/3 Die
Plan D
P=2/3 Die
72%
28 %
22%
78 %

12. Decisions The framing effect (Kahneman & Tversky)
Risk seeking and avoidance
When questions are framed in terms of gains we avoid risk (Prefer A over B)
When framed in terms of losses we are risk-seekers (Prefer D over C)
Other findings relating to the Framing Effect
It is unrelated to statistical sophistication
It is not eliminated when the contradiction is pointed out

13. Decisions The framing effect (Kahneman & Tversky)
You buy an advance ticket for $ 20 to see the Harlem Globetrotters play at the Oland Centre. When you get to the game, you discover that you have lost your ticket. Do you shell out $ 20 for another?
You go to the Oland Centre to see the Harlem Globetrotters play. Tickets cost $20. When you get to the ticket booth, you discover that you have lost twenty bucks. Do you buy a ticket anyway?

14. Decisions The framing effect (Kahneman & Tversky)
T & K’s results (theatre ticket for $10)
Lose ticket -: 46 % buy another ticket
Lose $ % buy another ticket
The Framing effect has been demonstrated in a number of contexts:
Vaccinations
Treating lung cancer
Genetic counseling
Gambling choices
Buying refrigerators

15. Decisions The framing effect (Kahneman & Tversky) Loss aversion
Receive a mug for participating in an experiment
What price would you sell this mug for?
What price would you pay for his mug?
Sell: $7.12, Buy: $2.87
Combining Framing effects and loss aversion

16. Decisions The framing effect (Kahneman & Tversky)
(1) You have decided to leave your current job, because it is an 80 min commute each way even though you like the pleasant social interaction with your co-workers. You have two options for a new job
Job A Limited contact with others; 20 min commute
Job B Moderately social; 60 min commute
Loss aversion
We are far more sensitive to losses than to gains
K & T: Receive $ 20 for a heads, pay $ 10 for a tails:

17. Decisions The framing effect (Kahneman & Tversky)
(2) You have decided to leave your current job, because it leaves you isolated from your co-workers even though you like the 10 min commute in each direction. You have two options for a new job
Job A Limited contact with others; 20 min commute
Job B Moderately social; 60 min commute
Loss aversion
Scenario (1) - 67 % chose Job B
Scenario (2) - 70 % chose Job A

18. Decisions The framing effect (Kahneman & Tversky)
Some weeks ago, you saw an add in the newspaper for a reduced rate for a week-end at a nearby resort. You sent in a $ 100 nonrefundable deposit. When the weekend arrives you set off with your partner. Both of you are extremely tired and somewhat ill and about half way to the resort you both realize that you would probably have a more pleasurable weekend at home.
Do you turn back?
The sunk-cost effect: A tendency toward taking extravagant steps to ensure that a previous expense was “not in vain”.

19. Decisions The framing effect (Kahneman & Tversky)
Implications for the legal system
You are to decide an only-child sole-custody case.
Parent A
Average income
Average health
Average working hours
Reasonable report with the child
Relatively stable social life
Parent B
Above average income
Very close relationship with child
Extremely active social life
Lots of work-related travel
Minor health problems
To whom do you award sole custody?
-> 64 % Chose Parent B
To whom would you deny sole custody?
-> 55 % Chose Parent B.

20. Decisions The Fundamental Attribution Error
The self-serving bias -> Actor-observer discrepancy which holds for negative behaviour
I did well on the exam because I work hard
I did poorly on the exam because the professor is unfair
After a college or pro sports game:
Winners: 80% make internal attributions
Losers: 53 % make internal attributions

21. Social Cognition The Fundamental Attribution Error
Above Average Effect 
People see themselves as better than average
e.g., driving ability, social skills, common sense, attractiveness
90 % of business managers think they are better than their average peer
In Australia, only 1 % of people rate their job performance as below average
In one survey of 829,000 high school seniors, zero percent rated themselves as below average in their ability to get along with others!
Most people think they are better than average at not rating themselves better than average

22. Outline 4/21/2017 Decisions Problems for next chapter Study Questions.
Domain knowledge
Illusory correlation
Problems for next chapter
Study Questions.
• What are illusory correlations?

23. Decisions Limitations in reasoning Limited domain knowledge
Our cognitive representation of the situation (AKA mental model) often has incomplete information.
Thermostats do not work like water faucets
Hitting the elevator button 5 times is not faster than hitting it once
20° C is not twice as warm as 10 °C
Quasi-magical behaviour

24. Decisions
Limitations in reasoning

25. Decisions
National science foundation surveys

26. Decisions
National science foundation surveys

27. Decisions
National science foundation surveys

28. Decisions Limitations in reasoning
Naïve Physics and Mental Models (McCloskey et al.)

29. Decisions
Limitations in reasoning
Results (A & B)

30. Decisions
Limitations in reasoning
Results (C)

31. Decisions Limitations in reasoning Domain of knowledge
Our domain of knowledge concerning physics is poor.
Impetus theory: a pre-Newtonian and incorrect concept concerning “curvature momentum”
Linda is 31 years old, single outspoken, and very bright. She majored in philosophy. As a student she was deeply concerned with the issues of discrimination and social justice, and also participated in anti-globalization demonstrations.
Rank the following in terms of their likelihood of describing Linda
Linda is a teacher at a local elementary school
Linda is a bank teller and is active in the feminist movement
Linda is an insurance agent
Linda is psychiatric social worker
Linda is a bank teller

32. Decisions Limitations in reasoning
Conjunction fallacy: Judging the probability of a conjunction to be greater than the probability of a constituent event.
Chapman & Chapman studies
Very Unlikely 6 4
Very Likely
Likelihood ratio 5 3
Statiscally
Naive
Intermediate
Statistically
Sophisticated

33. Decisions Limitations in reasoning Limitations in processing resources
Waltz et al.
Tested temporal lobe injured, prefrontal lobe injured, and normals
Two tests
Transitive Inference problems
E.g., John is taller than Sam; Sam is taller than Tim (2 propositions)
Raven Standard Progressive Matrices test

34. Decisions Limitations in reasoning Limitations in processing resources
Waltz et al.
Transitive inference
Raven’s Matrices
Dashed = Controls
Dotted = Temporal lobe
Solid = Prefrontal lobe

35. Problems for upcoming lecture
• Complete the following Sequence:
O, T, T, F, F, S, S, E, N, ….
• A Buddhist Monk leaves for a retreat atop a nearby mountain. He leaves at 6:00 AM and follows the only path that leads up the mountain. He travels quickly some of the way, he travels slowly, he stops for breaks. He arrives at the top of the mountain at 6:00 PM. The next morning, at 6:00 AM, he descends the mountain, again travelling at varying paces and with breaks. He arrives at 6:00 PM
Is there a point on the trail that the monk would have passed at exactly the same time of day on the way up and on the way down the trail?
• Three hobbits and three orcs need to cross a river. There is only one boat, and it can only hold two creatures at a time. This presents a problem: Orcs are vicious and whenever there are more orcs than hobbits they immediately attack and eat the hobbits. Thus, you can never let orcs outnumber hobbits on either side of the river.
Can you schedule a series of crossing that will get everyone safely across the river?

36. Problems for upcoming lecture
• Connect these nine dots with four connected straight lines.
• Three people play a card game. Each player has money in front of them (their ante). One each hand of this game, one player loses and the other two players win. The rules state that the loser must use the money in front of them to double the amount of money in front of each of the other two players. They stake their antes and play three hands. Each of them loses once and no one goes bust. The each finish with $8.00. What were the original antes (Hint: it is not $2 each).
• A landscaper has been instructed to plant four new trees such that each one is exactly the same distance away from each of the other trees. Is this possible?

37. Problems for upcoming lecture
Two flagpoles are standing, each 20 meters tall. A 30 meter rope is strung from the top of one of the flagpoles to the top of the other and hangs freely between them. The lowest point of the rope is 5 meters above the ground. How far apart are the two flagpoles? ?
5 m
20 m

38. Problems for upcoming lecture
You wish to make a bracelet out of 4 chain pieces. It costs $1 to open a link, and $2 to close a link. Can you make a bracelet for under $10?