Decision making

- [Lecturer] What do you think is more likely, someone dying from a shark attack, or someone dying from a fireworks accident? To answer that question, you have to make a decision. In decision making, we make a judgment about the desirability or in this case the probability of some outcome. If you're like most people, you used a heuristic or mental shortcut to make that decision. You may have thought about all the instances in which you've read about shark attacks in the news versus fatal accidents involving fireworks. That method is called the availability heuristic. You're using examples that readily come to mind or are easily available in your memory. Most of the time that's a very helpful shortcut, but unfortunately our easily memorable experiences don't always match the real state of the world. In this case, even though you've probably read more stories about shark attacks, the risk of dying from one is about one in 3.7 million whereas the risk of dying from a fireworks accident is about one in 340,000. A much higher risk, but usually much less publicized. Another heuristic that can lead us astray in decision making is the representativeness heuristic. In this case, we judge the probability of an event based on our existing prototype, or general concept of what is typical. For example, say I tell you that a person named Linda is 30 years old, single, outspoken, and very bright. She majored in philosophy and as a student, she participated in anti-nuclear demonstrations and organizations that fought discrimination. Now which do you think is more likely? That Linda is a bankteller, or that Linda is a feminist bankteller? If you're like most people, you answered that she is more likely to be a feminist bank teller. Even if you don't know any feminists, or even anyone who's exactly like our imaginary Linda, she fits your prototype of how a feminist would act. She is representative of a feminist. And most of the time, a representativeness heuristic can help us make quick judgments, however in this case it leads us to something called a conjunction fallacy, which is when people think that the co-occurrence of two instances, being a feminist and being a bankteller, is more likely than a single one, just being a bankteller. 'Cause statistically speaking, there are a lot more banktellers than there are feminist banktellers. So it's actually more likely that she's just a bankteller even though your instincts are telling you otherwise. Now be careful not to get confused between availability and representativeness. When using the availability heuristic, you're thinking of actual memories that can come to your mind that are available in your head. With representativeness, you're not necessarily thinking of exact memories, you're thinking of a prototype of this idea. Okay, so we've talked about some heuristics that guide our decision making processes, so now let's talk about some biases that prevent us from making correct decisions, or from changing our decisions once they're made. One bias is overconfidence which is just our tendency to be more confident than correct. You may have experienced this going into a test when you thought you'd ace it, but then you didn't know a lot of the information. And this overconfidence could be due to fluency while you're studying, or the ease of processing. In other words, things might have felt really easy when you were studying in your room, but if you never tried to test yourself to see if you really knew the answers, then you might overestimate your ability to produce answers when you needed to. You may have also experienced overconfidence if you've ever been in an argument when you're positive you're right until someone shows proof that you're not. If you don't change your mind after you get this new information though, then you're falling prey to the bias of belief perseverance. And this happens a lot around election time. Whenever people hear something they don't like about their favorite candidate, they often ignore it or rationalize it away. Though this bias is slightly different than something called confirmation bias which is when you actively seek out only the information that confirms your existing beliefs. So in our election example, you would be exhibiting confirmation bias if you only read stories that talked about how wonderful your favorite candidate is, but you would be exhibiting belief perseverance if you learned about, but then ignored, information that you didn't like about your candidate. Another factor that can affect decision making is framing, which is just how you present the decision. For example, suppose I tell you there is a disease about to strike the population that will kill 600 people. However, there are two options for programs to combat this disease. If you pick option A, then there's a 100% chance that exactly 200 people will be saved. If you pick option B, there's a 1/3 chance that all 600 people will be saved, and a 2/3 chance that nobody will be saved. Which do you want to pick? Okay now try this one. The same disease is coming through and you again have two options. If you pick option A, then there's a 100% chance that exactly 400 people will die. If you pick option B, then there is a 1/3 chance that no one will die, and a 2/3 chance that 600 people will die. Now which option do you want to pick? If you're like most people, when the decision is framed in terms of how many people will be saved, you're more likely to pick option A, save 200 people for sure. But when the decision is framed in terms of how many people will die, you're more likely to pick option B to avoid killing 400 people for sure. Even though saving 200 people is the exact same thing as letting 400 people die in this example, it seems better to pick that option when it's framed or presented in terms of how many people will be saved. Likewise, it seems better to pick an option that offers a chance of no people dying rather than to risk not saving some people. So hopefully this doesn't make you paranoid, but our decisions are not quite as black and white or even as consistent as we think they are. So next time you have to judge something, try to take a step back and consider all the factors that could be influencing your decision.