1 Introduction and Overview: Judgments,
Decisions, and Rationality
Introduction
- Judgments =essentially evaluations or estimates
- Decisions = an intention to pursue a particular course or action. They are informed by our
judgment
What is rationality?
- Rationality = adherence to some normative model
- Classical economics assume rationality as a given
- Economists: as people gain experience of a particular domain they learn accordingly and so
behave in a more rational way
- Analogy with visual perception: the Müller-Lyer illusion. Although it may seem somewhat
artificial, illusion can occur even when we perceive the natural environment. An illusion that
most people are not aware of until it is drawn to their attention is the moon illusion.
- Researchers: there needs to be a mass correction of our visual system in order to prevent such
illusions clearly, our visual systems have evolved in such a way to help us successfully navigate
our environments. The occasional errors in making judgments and decisions may be a small
price to pay for a cognitive system that is otherwise wll adapted to facilitating our survival and
reproduction.
- Individuals who score higher on measures of intelligence are more susceptible to visual illusions.
- The nature of the contemporary environment is very different from that within which our
ancestors evolved, such that both the visual and the intellectual environment can pose
problems where any errors can be costly.
- For instance, people who play lotteries often tned to behave as though sequential outcomes are
causally connected. In the natural world, of course, people are quite well attuned to identifying
the many real causal connections that exist between events. However, in a fair lottery there is
no connection between events.
- People also frequently lose out due to a tendency to focus on immediate concerns rather than
distant ones. This means that many people fail to save sufficiently for their retirement.
- It seems that people often don’t behave in their own best interests, so it is tempting to think of
them as irrational. On the other hand, the success of the species as a whole suggest otherwise
- Rational thinking has come to be identified with highly analytical thinking that considers
multiple options, yet in some environments there is evidence that simpler strategies can be
more successful.
- By changing the decision environment we can sometimes change behavior.
, Bounded rationality
- Herbert Simon: criticized rational models of decision making for ignoring situational and
personal constraints such as time pressure and limited cognitive capacity.
- Bounded rationality = the mind evolves short-cut strategies that delivers reasonable solutions to
real-world problems.
- Program of research: Judgment under uncertainty: Heuristics and biases. Much of this research
focused on the systematic errors (biases) that could occur through the use of heuristics,
although the primary aim of this research was to elucidate the nature of the heuristics
themselves.
- Another programme of research: Simple heuristics that make us smart. This approach has
placed special emphasis on the relationship between the human mind an the nature of the
environment in which it evolved. In other words, the used of heuristics often leads to positive
outcomes precisely because the heuristics themselves are the product of environmental
contingencies.
- Adaptive decision maker approach: people have a variety of possible strategies available to
them when choosing between options, varying from fairly simplistic strategies to highly
analytical ones. The final choice of strategy depends on a trade-off between the effort required
to implement the strategy and the importance of achieving high accuracy. In many
circumstances, a reasonable level of accuracy can actually be achieved by using a less analytical
strategy.
- There is now some evidence that the unconscious mind might well be better suited to making
more complex decisions, with the conscious mind better at making simpler decisions. On the
other hand, conscious thought does seem to be beter at abstracting logical structure from the
content and context within it is embedded.
- Many researchers now propose a dual system theory of thinking involving fast unconscious
processes, on the one hand, and slower conscious processes on the other.
An overview of the subsequent chapters
- Chapter 2:
Conceptual framework for thinking about predictive or diagnostic judgments The
Lens model: distinguishes between objective relations between, on the one hand,
predictive cues and outcomes, and on the other, the actual subjective way in which
people use those cues. In other words, the objective relationship between cues and
outcomes is based on how much importance should be attached to certain items of
information when making a prediction or diagnosis; typically, though, people’s
subjective assessment of the importance of information does not correspond to the
objective relationships
Decisions, and Rationality
Introduction
- Judgments =essentially evaluations or estimates
- Decisions = an intention to pursue a particular course or action. They are informed by our
judgment
What is rationality?
- Rationality = adherence to some normative model
- Classical economics assume rationality as a given
- Economists: as people gain experience of a particular domain they learn accordingly and so
behave in a more rational way
- Analogy with visual perception: the Müller-Lyer illusion. Although it may seem somewhat
artificial, illusion can occur even when we perceive the natural environment. An illusion that
most people are not aware of until it is drawn to their attention is the moon illusion.
- Researchers: there needs to be a mass correction of our visual system in order to prevent such
illusions clearly, our visual systems have evolved in such a way to help us successfully navigate
our environments. The occasional errors in making judgments and decisions may be a small
price to pay for a cognitive system that is otherwise wll adapted to facilitating our survival and
reproduction.
- Individuals who score higher on measures of intelligence are more susceptible to visual illusions.
- The nature of the contemporary environment is very different from that within which our
ancestors evolved, such that both the visual and the intellectual environment can pose
problems where any errors can be costly.
- For instance, people who play lotteries often tned to behave as though sequential outcomes are
causally connected. In the natural world, of course, people are quite well attuned to identifying
the many real causal connections that exist between events. However, in a fair lottery there is
no connection between events.
- People also frequently lose out due to a tendency to focus on immediate concerns rather than
distant ones. This means that many people fail to save sufficiently for their retirement.
- It seems that people often don’t behave in their own best interests, so it is tempting to think of
them as irrational. On the other hand, the success of the species as a whole suggest otherwise
- Rational thinking has come to be identified with highly analytical thinking that considers
multiple options, yet in some environments there is evidence that simpler strategies can be
more successful.
- By changing the decision environment we can sometimes change behavior.
, Bounded rationality
- Herbert Simon: criticized rational models of decision making for ignoring situational and
personal constraints such as time pressure and limited cognitive capacity.
- Bounded rationality = the mind evolves short-cut strategies that delivers reasonable solutions to
real-world problems.
- Program of research: Judgment under uncertainty: Heuristics and biases. Much of this research
focused on the systematic errors (biases) that could occur through the use of heuristics,
although the primary aim of this research was to elucidate the nature of the heuristics
themselves.
- Another programme of research: Simple heuristics that make us smart. This approach has
placed special emphasis on the relationship between the human mind an the nature of the
environment in which it evolved. In other words, the used of heuristics often leads to positive
outcomes precisely because the heuristics themselves are the product of environmental
contingencies.
- Adaptive decision maker approach: people have a variety of possible strategies available to
them when choosing between options, varying from fairly simplistic strategies to highly
analytical ones. The final choice of strategy depends on a trade-off between the effort required
to implement the strategy and the importance of achieving high accuracy. In many
circumstances, a reasonable level of accuracy can actually be achieved by using a less analytical
strategy.
- There is now some evidence that the unconscious mind might well be better suited to making
more complex decisions, with the conscious mind better at making simpler decisions. On the
other hand, conscious thought does seem to be beter at abstracting logical structure from the
content and context within it is embedded.
- Many researchers now propose a dual system theory of thinking involving fast unconscious
processes, on the one hand, and slower conscious processes on the other.
An overview of the subsequent chapters
- Chapter 2:
Conceptual framework for thinking about predictive or diagnostic judgments The
Lens model: distinguishes between objective relations between, on the one hand,
predictive cues and outcomes, and on the other, the actual subjective way in which
people use those cues. In other words, the objective relationship between cues and
outcomes is based on how much importance should be attached to certain items of
information when making a prediction or diagnosis; typically, though, people’s
subjective assessment of the importance of information does not correspond to the
objective relationships
