1. Psychology 466: Judgment & Decision Making Psychology 466: Judgment & Decision Making Instructor: John Miyamoto 10/01/2015: Lecture 01-1 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.

2. Outline General course information Get to know each other Psychology of judgment & decision making – What is it? Background ideas from general cognitive psychology Psych 466, Miyamoto, Aut '15 2 General Information re This Course

3. Psych 466, Miyamoto, Aut '15 3 General Information Instructor:John Miyamoto Email:jmiyamot@u.washington.edu Office:215 GuthriePhone:206-368-9761 Office hours:Thursday 12:00 – 1:00 in the Suzallo study room across from the coffee shop (if you can't find me, send me a text or phone message); OR make an appointment (contact by email or phone) UW computing provides JM with all student email addresses. Let JM know if you use a non-UW email address. Let JM know if you are not officially enrolled in this class. Textbooks

4. Psych 466, Miyamoto, Aut '15 4 Required Textbooks Hastie, R., & Dawes, R. M. (2009). Rational choice in an uncertain world (2 nd edition). ♦ Amazon prices: $68.40 in paperback. Kahneman, D. (2011). Thinking, fast and slow. ♦ Amazon price: $6.74 as a paperback. Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). Smart choices: A practical guide to making better decision. ♦ Amazon price: $21.68 as a paperback. [Gigerenzer, G., & Brighton, H. (2009). Homo Heuristicus: Why biased minds make better inferences. Topics in Cognitive Science, 1, 107-143. pdf ]Homo Heuristicus: Why biased minds make better inferences There are ebook versions of these books (Kindle, possible epub). PDF’s On Psych 466 Website

5. PDF’s for Week 1 Required Reading Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). Smart choices: A practical guide to making better decisions. Table of Contents, Preface & Chapter 1 Table of Contents, Preface & Chapter 1 Hastie, R., & Dawes, R. M. (2009). Rational choice in an uncertain world (2nd ed.). Table of Contents; Chapter 1; Chapter 2;Table of ContentsChapter 1 Chapter 2 Gigerenzer, G., & Brighton, H. (2009). Homo Heuristicus: Why biased minds make better inferences. Topics in Cognitive Science, 1, 107-143.Homo Heuristicus: Why biased minds make better inferences **NO PDF FOR KAHNEMAN** PDF’s can be downloaded from the Psych 466 website. Psych 466, Miyamoto, Aut '15 5 Reading Assignment for Week 1

6. 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 Psych 466, Miyamoto, Aut '15 6 A standard view of JDMApplied Decision Making Two Conflicting View of Heuristic Reasoning Psych 466 Website

7. 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. Psych 466, Miyamoto, Aut '15 7 Assignments, Exams, Formula for the Course Grade

8. Psych 466, Miyamoto, Aut '15 8 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 & 39 (each) Midterm 36 Final Exam37 Course Website & Collect-It Website

9. Psych 466, Miyamoto, Aut '15 9 Course Website & Collect-It Website Course website http://faculty.washington.edu/jmiyamot/p466/p466-set.htm Assignments and lecture notes will be posted. Catalyst Collect It website for turning in assignments & exams https://catalyst.uw.edu/collectit/dropbox/jmiyamot/36460 Get To Know Each Other

10. Psych 466, Miyamoto, Aut '15 10 Get to Know Each Other What is a Decision?

11. Psych 466, Miyamoto, Aut '15 11 What is a decision? Discuss Give some examples. Get some examples from the class. What is a Decision? – Some Examples

12. Psych 466, Miyamoto, Aut '15 12 What is a decision? Major reflective 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) What Factors Do or Should Affect a Decision?

13. Psych 466, Miyamoto, Aut '15 13 What factors that DO affect a decision? What factors that SHOULD affect a decision? Are there factors that affect decisions even though they should not? Discuss General Description of Factor That Should Affect a Decision

14. Psych 466, Miyamoto, Aut '15 14 What factors that DO or 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. 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?

15. Psych 466, Miyamoto, Aut '15 15 Normative Decision Analysis Enumerate outcomes Enumerate options Construct a decision analysis for the decision Evaluate the probabilities of different possible outcomes Determine which option has the greatest "expected utility." What Are Typical Characteristics of Human Decision Making?

16. 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. Psych 466, Miyamoto, Aut '15 16 History of the Psychology of Decision Making

17. Psych 466, Miyamoto, Aut '15 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

18. See : The lecture for the following Monday. It has improved versions of the some of the following slides. Psych 466, Miyamoto, Aut '15 18 Thursday, October 01, 2015 : The Lecture Ended Here

19. Psych 466, Miyamoto, Aut '15 19 The Cognitive Approach to Judgment & Decision Making 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

20. The Standard Cognitive Model of Human Memory Psych 466, Miyamoto, Aut '15 20 Sensory Registers H&D Fig. 1.1 Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory

21. Psych 466, Miyamoto, Aut '15 21 Sensory registers retain the sensory information for very brief periods of time. Working Memory H&D Fig. 1.1 Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory

22. Psych 466, Miyamoto, Aut '15 22 Working memory (WM) holds a limited amount of information for 10 – 20 seconds. Thoughts are actively manipulated in WM. Long-Term Memory Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory H&D Fig. 1.1

23. Psych 466, Miyamoto, Aut '15 23 Long-term memory (LTM) retains information over longer periods of time. LTM interacts with WM. General Hypothesis of Cognitive Research Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory H&D Fig. 1.1

24. Psych 466, Miyamoto, Aut '15 24 General Hypothesis of Cognitive Research ♦ Limitations in working memory impose limitations on human ability to engage in complex reasoning. ♦ Decision making requires complex reasoning. Basic Message: Cognitive Limitations Produce Simplifications H&D Fig. 1.1 Sensory Input Buffers Working Memory Central Executive Phonological Buffer Goal Stack Visuospatial Buffer Long-Term Memory

25. Psych 466, Miyamoto, Aut '15 25 Basic Message from Many Cognitive Studies LIMITED WM CAPACITY: When information is complex, people are forced to simplify the information. Simplifications can lead to distortions. Exception: Experience can teach one to integrate specific types of complex information but only in some cases. ♦ Example: Expert chess players can reason about complicated chess problems. ♦ Example: Experienced drivers can understand traffic situations that are actually very complex. Next a complex representation of decisions under risk (decision trees). Where We Are in the Lecture

26. Psych 466, Miyamoto, Aut '15 26 Where We Are 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 clinical judgment versus statistical Models Brunswik’s Lens Model of Human Judgment Linear models applied to making better choices Applications to clinical judgment Clinical vs Actuarial Jdmt Next Lecture

27. Psych 466, Miyamoto, Aut '15 27 Intuitive Judgment versus Acturial Judgment Intuitive judgment ♦ Combine complex information in your head ♦ Make decision based on gut feeling Actuarial judgment (a.k.a. statistical model or linear model) ♦ Base decisions on a statistical decision rule. Statistical Models Outperform Human Judges

28. Examples of Judgment Problems We will only consider decisions to which intuitive judgment and actuarial judgment (statistical methods) both apply. -------------------------------------------------------------------------- E.g., Clinicians attempt to identify patients with progressive brain dysfunction. ♦ Data = intellectual test results ♦ Experienced clinicians achieved 58% correct detection of new cases. ♦ Statistical model achieved 83% correct detection of new cases. E.g., Bank loan officer must decide which loan applications are “good risks” and which are “bad risks.” E.g., Professors must decide which applicants will do well in grad school and which will not do well. Psych 466, Miyamoto, Aut '15 28 Critique of Clinical Judgment – What Is It?

29. Critique of Clinical Judgment Clinical insight – does it exist? Clinical judgment – what is it good for? Clinical judgment – what are its weaknesses? Accusation: Belief in the efficacy of intuitive clinical judgment is a cognitive conceit. Psych 466, Miyamoto, Aut '15 29 General Finding: Stat Models Outperform Human Judges

30. Psych 466, Miyamoto, Aut '15 30 General Finding: Stat Models Outperform Human Judges Statistical models almost always outperform the human judges on clearly defined decision tasks. Human cognitive processes are good at noticing particular pieces of information. ♦ Does my friend look happy? Sad? Stressed? Irritated? ♦ Is the patient nervous? Defensive? Exhibitionistic? Human cognitive processes are not good at integrating multiple pieces of information. ♦ Can I predict how my friend will feel about a surprise party? ♦ Can the clinician predict how the patient will progress after 4 months of therapy? Implications of this Lecture / END

31. Psych 466, Miyamoto, Aut '15 31 Implications of this Lecture We can improve human decisions by stressing what humans are good at:... noticing what are important issues that are relevant to a decision;... evaluating how good or bad is an outcome on a specific dimension; while avoiding what we are not good at:... combining complex information in our heads. Know thyself → Make better decisions NEXT WEEK: Linear models of human judgment...... and what they tell us about us! END