2.1 Problem 7 Summary

2.1 Problem 7
Part A
Judgement- deciding on the likelihood of various events using incomplete information
 Important aspect= accuracy
 Forms important initial part of decision making
Decision making- selecting one option from several possibilities
 Factors involved in decision-making depend on important of decision
 Problem-solving differs in individuals must generate own solution, rather than
choosing presented options
 Typically assess decision quality in terms of consequences
o Good if given info available at time, even if consequences are poor

Judgement Research
 Subjective assessment of probability of something, often changed by new info
 New info increases or decreases strength of our beliefs

Bayes (Bayesian inference)
- Situations where 2 possible subjective beliefs of hypotheses
- Showed how new data or info changes subjective probabilities of each
hypothesis being correct
Bayes theorem: need to evaluate beliefs concerning relative probabilities of 2
hypotheses before data are obtained
Need to calculate relative probabilities of obtaining the observed data under each
hypothesis (likelihood ratio)
Kahneman & Tversky- Bayes theory
Method: Cab involved in accident one night
85% belonged to Green company, 15% to Blue company
Results: Eyewitness identified cab as Blue cab
 Ability to identify cabs under similar visibility conditions test, she
was wrong 20% of the time
Probability for blue cab is .15, for green cab is .85: probability of
eyewitness identifying cab as blue when it was Blue= .80
Probability for Blue cab when it was Green= .20
 Ignored base-rate info about number of cabs as hard for
participants to see causal structure

 Individuals making judgements should take account of base-rate information-
relative frequency of event within a given probability
o Usually ignore this info or de-emphasise it
 Recency and familiarity produce a distortion in frequency estimation, increasing
or decreasing availability
o Eg. estimations of populations vary dependent on the media cover about
them

Heuristics
Tversky and Kahneman
 Most people given judgement tasks us heuristics (-strategies that ignore part of
info with goal of making decisions more quickly, frugally, and or accurately than
more complex methods
o Greatly reduce effort associated with cognitive tasks
 Can lead us to ignore base-rate info
o Use representativeness heuristics- deciding an object or person
belongs to a given category because it appears typically or representative
of that category
 Conjunction fallacy- mistaken belief that the conjunction or combination of two
events is more likely than one event on its own
o still occurs even when everything is done to ensure people interpret
problem correctly

, o Explanation of C.F assume occurs due to high perceived probability of
additional info given the description

Availability Heuristic
Availability heuristic- frequencies of events can be estimated by how easy or hard it is
subjectively to retrieve them from long term memory
Liechtenstein Et Al.
Method: Judge likelihood of different causes of death
Results: attracting much publicity, judged more likely that those that do not, even
when opposite is true
Pachur et Al.- can explain people’s judged frequencies of various causes of death in three
ways
1. Use availability heuristic based on own direct experience
 Best predictor of judged frequencies of different causes
2. Use availability heuristic based on media coverage of causes of death + own
experience
 Least successful predictor
3. Use affect heuristic- influences many judgements
 Predicted by judged risks
Oppenheimer:
Method: pairs of names, one famous, one non-famous
Asked to indicate which was more common
Results: Selected non-famous ones
 if using availability heuristic, would select famous ones
participants used deliberate thought to override availability heuristic
Significance: availability heuristic can sometimes be overridden
 Individuals often rely on available info even when have knowledge indicating they
shouldn’t
 Observed in everyday situation
Study: married partners individually state which of them performed more
of household chores
Results: each stated he or she mero around 4 fifths of the chores
Significance: may engage in using availability heuristic when it confirms
their beliefs about themselves

Anchoring-and-Adjustment Heuristic
Anchoring-and-Adjustment Heuristic- use an initial estimate (anchor) then adjust it
to produce final estimate: adjustment typically insufficient
 Effects occur in many settings eg. art auction, anchor price towards price
achieved in previous auctions
 Operates even when anchor is arbitrary or impossibly extreme
 Both novices and experts
 Likely anchor restricts search for relevant info in memory
o Concentrate search on info close to anchor, even if this isn’t realistic
 Use when estimating confidence intervals: supply range that is too narrow
 can overcome these by thinking about initial estimate, ask whether paying
enough attention to feature of this specific situ

Recognition heuristics
 Occurs during comparison of relative frequency of 2 categorises: recognise one
category but not the other, conclude that recognised category has highly
frequency
Framing
Framing effects- the way that options are presented influences the selection of an
option
 Tend to choose options offering a small but certain gain, rather than larger but
uncertain gain
o Unless uncertain gain is either tremendously greater, or modestly less than
certain