Review We have Selective Perception – Context Dependent – Influenced by expectations We try to...

Review

• We have Selective Perception– Context Dependent– Influenced by expectations

• We try to reconcile disparate beliefs and actions

• Our memory isn’t so good

Selective Perception

• There are limits to how much we can perceive at once.

Selective Perception

• We tend to see what we expect to see.

Half the class close your eyes.

Selective Perception

• We tend to see what we expect to see.

There is a 50% chance that Chris is lying to you.

Selective Perception

• We tend to see what we expect to see.

Half the class close your eyes.

Story Time

Selective Perception

• Survey Research! – 1 (not at all) - 10(totally cool)

• How much did you like Chris’s story?

• How accurate would you guess Chris’s story was?

Selective Perception

• Expectations matter

Practical Example

Context Dependence

• We don’t perceive things independently. Context matters:– Distracting or complementary stimuli

Cognitive Dissonance

How we resolve Cognitive Dissonance

• Reduce importance

• Add more consonant beliefs

• Change beliefs

Memory

• Bias distorts• Diminishes

• If memory diminishes, what are we using to make ad hoc decisions?– What do you think about Michael Jordan?

How Questions How Questions Affect AnswersAffect Answers

Section IISection II

Order EffectsOrder Effects

First Response influences Second First Response influences Second ResponseResponseStatistics vs. This ClassStatistics vs. This Class

Order of Alternatives MattersOrder of Alternatives MattersFewer, the same number, or more?Fewer, the same number, or more?

Pseudo-opinionsPseudo-opinions

How do you feel about the Cookies Act How do you feel about the Cookies Act now that it has been passed in the now that it has been passed in the United States Senate?United States Senate?

Filtering out Pseudo-opinionsFiltering out Pseudo-opinions

Unfiltered:Unfiltered:Oreos are better than Chips Ahoy. Oreos are better than Chips Ahoy. Do you agree or disagree?Do you agree or disagree?

Oreos are better than Chips Ahoy. Do Oreos are better than Chips Ahoy. Do you have an opinion about that? If you have an opinion about that? If so, do you agree or disagree?so, do you agree or disagree?

Inconsistency: Inconsistency: do Attitudes reflect Behavior?do Attitudes reflect Behavior?

““Measuring an attitude, Measuring an attitude, opinion or preference is not opinion or preference is not so simple as asking a so simple as asking a question.” question.”

-Scott Plous-Scott Plous

Question Wording and Question Wording and FramingFraming

Forced ChoiceForced ChoiceSmall extreme, large extreme, or Small extreme, large extreme, or middle?middle?

Frames of ReferenceFrames of ReferenceHow Tall?How Tall?

vs.vs.How Short?How Short?

Social DesirabilitySocial Desirability

If program A is adopted, 200 people will be If program A is adopted, 200 people will be saved.saved.

If program B is adopted, p = 1/3 all will be If program B is adopted, p = 1/3 all will be saved, p = 2/3 no one is saved.saved, p = 2/3 no one is saved.

VS.VS.

If program C is adopted, 400 people will If program C is adopted, 400 people will die.die.

If program D is adopted, p = 1/3 nobody If program D is adopted, p = 1/3 nobody will die, p = 2/3 all will die.will die, p = 2/3 all will die.

Psychological AccountingPsychological Accounting

Regis: You’ve now won $125,000. Regis: You’ve now won $125,000. Would you like to take the money, or Would you like to take the money, or try for $500,000? Remember, if you try for $500,000? Remember, if you get the next question wrong, you will get the next question wrong, you will go back to $32,000.go back to $32,000.

Howie: Deal or no deal?Howie: Deal or no deal?

Models of Decision Models of Decision MakingMaking

Section IIISection III

Normative Models of Normative Models of Decision MakingDecision Making

Expected Utility TheoryExpected Utility Theory

Nicholas Bernoulli’s Nicholas Bernoulli’s Six Principles of Rational Decision Makers:Six Principles of Rational Decision Makers:

1. Ordering Alternatives1. Ordering Alternatives 2. Dominance2. Dominance

3. Cancellation3. Cancellation 4. Transitivity4. Transitivity

5. Continuity5. Continuity6. Invariance 6. Invariance

Paradoxes in RationalityParadoxes in Rationality

The Allais Paradox for The Allais Paradox for CancellationCancellation

Ellsberg’s Paradox for Ellsberg’s Paradox for CancellationCancellation

Tversky’s study of Tversky’s study of Intransivity Intransivity

Lichtenstein and Slovic’s Preference Lichtenstein and Slovic’s Preference ReversalReversal

Are violations of the theory truly Are violations of the theory truly irrational?irrational?

Should we base our experiments on Should we base our experiments on the behavior of rational actors?the behavior of rational actors?

OROR

Should we first attempt to create Should we first attempt to create behavioral models from observation?behavioral models from observation?

Descriptive Models of Descriptive Models of Decision MakingDecision Making

Satisficing Satisficing

People don’t optimize whenPeople don’t optimize when

they make decisions. they make decisions.

They choose paths that ------They choose paths that ------

satisfy their most importantsatisfy their most important

needs.needs.

Prospect TheoryProspect Theory

Value rather than “utility”Value rather than “utility”

*Utility = Net Wealth*Utility = Net Wealth

*Value = Gains and Losses*Value = Gains and Losses

Preferences will depend upon how a Preferences will depend upon how a problem is framed.problem is framed.

The Certainty and The Certainty and Pseudocertainty EffectsPseudocertainty Effects

People pay more to remove 1 of 1 People pay more to remove 1 of 1 bullets than to remove 1 of 4 bullets. bullets than to remove 1 of 4 bullets.

Buy three get one free = Buy three get one free =

25% price reduction25% price reduction

Regret TheoryRegret Theory

Based on Counterfactual ReasoningBased on Counterfactual Reasoning1. People feel rejoicing and regret1. People feel rejoicing and regret2. People anticipate these sensations 2. People anticipate these sensations

when they make decisionswhen they make decisionsOf course, when the decision may result Of course, when the decision may result

in death, regret theory does not apply. in death, regret theory does not apply.

Multi-attribute ChoiceMulti-attribute Choice

Compensatory StrategiesCompensatory Strategies

Linear ModelingLinear ModelingWeigh the dimensions by importanceWeigh the dimensions by importance

Additive DifferenceAdditive DifferenceWeigh the differences among alternativesWeigh the differences among alternatives

Ideal Point ModelingIdeal Point ModelingWhat does the ideal look like?What does the ideal look like?

Noncompensatory StrategiesNoncompensatory Strategies

Conjunctive RuleConjunctive RuleEliminate alternatives Eliminate alternatives

Disjunctive RuleDisjunctive RuleAlternatives evaluated on best attributesAlternatives evaluated on best attributes

Lexicographic StrategyLexicographic StrategyChoose a dimension to evaluateChoose a dimension to evaluate

Elimination-by-aspectsElimination-by-aspectsChoose a dimension to evaluate based on Choose a dimension to evaluate based on

the probability of its importancethe probability of its importance

Expected Utility Theory vs. Expected Utility Theory vs. Prospect TheoryProspect Theory

Why must we consider both theories?Why must we consider both theories?

What is more important, making What is more important, making people into rational decision makers, people into rational decision makers,

OROR

Allowing for the irrationality of their Allowing for the irrationality of their decisions?decisions?

Heuristics and Biases

Chp. 10 – chp. 13

Overview Representativeness Heuristic

The Availability HeuristicThe Availability Heuristic

Probability and RiskProbability and Risk

Representativeness Heuristic People often use “Heuristic” or general rules

of thumb, to arrive at their judgment.

Tversky and Kahneman—“People often judge probabilities …by the degree to which A resembles B”.

The Law of Small Numbers “...a belief that random samples of a population will

resemble each other and the population more closely than statistical sampling theory would predict.”

Examples: Gambler’s fallacy –

“the belief that a successful outcome is due after a run of bad luck…”

Remember that chance is not self-correcting!

Examples: The Hot Hand –

“…a streak shooter in basketball or an athlete on a roll…”

Neglecting Base Rates

Examples: Among 100 persons, there are 30 engineers, and the other 70 are lawyers.

When people are provided with the descriptive information, they often ignore the base rates

Q: John is a 30-year old man. He is married with no children. A man of high ability and high motivation, he promises to be quite successful in his field. He is well liked by his colleagues. What is the probability that John is an engineer?

Subjects give 50%

Whenever possible, pay attention to base rates, do not be trapped with the detail description

Overview Representativeness Heuristic

The Availability HeuristicThe Availability Heuristic

Probability and RiskProbability and Risk

Availability HeuristicTversky and Kahneman—

“…Assess the frequency of a class or the probability of an event by the ease with which instances or occurrences can be brought to mind.”

Example: Which is a more likely cause of death in the U.S. last year— stomach cancer or car accident?

The Author notes that—

“Some events are more available than others not because they tend to occur frequently or with high probability, but because they are inherently easier to think about, because they have taken place recently.”

Do not trust your immediate intuitions for judgments of frequency or probability

Vividness Decision makers are affected more strongly by

vivid information than by pallid, abstract, or statistical information.

Because vivid information is more “available” and easier to recall than pallid information, it often has a disproportionate influence on judgments.

Imaginative Study

An imaginative event will increase its availability and make it appear more likely

Who will win?

Overview Representativeness Heuristic

The Availability HeuristicThe Availability Heuristic

Probability and RiskProbability and Risk

Bias of Probability and risk Positive outcomes are viewed as more

probable than negative outcomes

What was your dream when you were a child?

Bias of Probability and risk

Perceptions of risk are highly subjective.

Importance in research (From 2003)

Use heuristics and probability measures carefully

Apply corrective measures to your data to “undo” the effect of biases

Don’t let your “desire” for accuracy sway you towards inaccurate data

The Psychology The Psychology of Judgment and of Judgment and Decision MakingDecision Making

Chapter 13 to Chapter 16Chapter 13 to Chapter 16

By SeanBy Sean

US$ 119,900US$ 129,900

US$ 139,900US$ 149,900

What do you think?

Real Estate AgentsReal Estate Agents

Apparent Apparent Listing Listing Price $Price $

MEAN ESTIMATES GIVEN BY REAL ESTATE MEAN ESTIMATES GIVEN BY REAL ESTATE AGENTSAGENTS

AppraisedAppraised

Value, $Value, $Recommended Recommended Selling Price $Selling Price $

Reasonable Reasonable Purchase Price, Purchase Price,

$$

LowestLowest

Offer, $Offer, $

119,900119,900 114,204114,204 117,745117,745 111,454111,454 111,136111,136

129,900129,900 126,772126,772 127,836127,836 123,209123,209 122,254122,254

139,900139,900 125,041125,041 128,530128,530 124,653124,653 121,884121,884

149,900149,900 128,754128,754 130,981130,981 127,318127,318 123,818123,818

This table is adapted from a study by Gregory Northcraft and Margaret Neale (1987)

Anchoring and Anchoring and AdjustmentAdjustment

How do you figure out the answer to How do you figure out the answer to an unthinkable problem?an unthinkable problem? Guess, based on your knowledge, or Guess, based on your knowledge, or

““expectationexpectation”” What about some hint?What about some hint?

Good to help you figure out the answerGood to help you figure out the answer What is the result? Is it correct?What is the result? Is it correct?

To make an adjustment in the hintTo make an adjustment in the hint Totally WRONG!Totally WRONG!

Anchoring and Anchoring and AdjustmentAdjustment

What is the procedure of your thinking?What is the procedure of your thinking? ExpectationsExpectations When given a hint, you will deeply When given a hint, you will deeply

influenced by the hint, and adjust your influenced by the hint, and adjust your answer around the hint, which is called answer around the hint, which is called ““Anchoring EffectAnchoring Effect””

Get a wrong answer, and you may make Get a wrong answer, and you may make wrong decision based on the wrong answerwrong decision based on the wrong answer

People often cannot realize anchoring People often cannot realize anchoring effectseffects

Anchoring and Anchoring and AdjustmentAdjustment

How anchoring effects influence peopleHow anchoring effects influence people’’s s judgment?judgment? Adjust insufficiently from the anchor valuesAdjust insufficiently from the anchor values

The characteristics of anchoring effectsThe characteristics of anchoring effects PervasivePervasive Extremely robustExtremely robust

How to overcome it?How to overcome it? Be aware of extremely high / low anchor Be aware of extremely high / low anchor

valuesvalues Consider multiple anchor values before Consider multiple anchor values before

making a final estimatemaking a final estimate

Coincide, Luck & Coincide, Luck & SuperstitionSuperstition

You won 10 thousand You won 10 thousand dollars with 0.001% chancedollars with 0.001% chance

You won 10 thousand You won 10 thousand dollars again with 0.001% dollars again with 0.001% chancechance

God is helping you?God is helping you? You have luckYou have luck But will you won 10 But will you won 10

thousand dollars in the next thousand dollars in the next time? What is the chance?time? What is the chance?

The Perception of The Perception of RandomnessRandomness

CoincidenceCoincidence Some random event happens with little chanceSome random event happens with little chance An act of God?An act of God?

LuckLuck Some random events generate some results Some random events generate some results

expected by you till nowexpected by you till now SuperstitionSuperstition

Try to claim that you will continue to have luck Try to claim that you will continue to have luck in the future on some random eventsin the future on some random events

The Perception of The Perception of RandomnessRandomness

Consider it with patterns? Or consider it Consider it with patterns? Or consider it as randomized?as randomized?

Repetition are often considered as a Repetition are often considered as a meaningful sequencemeaningful sequence

Randomness is not with as many changes Randomness is not with as many changes as expectedas expected

How to avoid superstition?How to avoid superstition? Similar outcomes that happened often do not Similar outcomes that happened often do not

indicate patternindicate pattern Resist the temptation to view short runs of the Resist the temptation to view short runs of the

same outcome as meaningfulsame outcome as meaningful

The Perception of The Perception of RandomnessRandomness

People have difficulties in behaving People have difficulties in behaving randomly, because people have randomly, because people have difficulties in judging randomnessdifficulties in judging randomness

People can be trained to behave People can be trained to behave randomly in a period of time by randomly in a period of time by feedback on a bunch of statistical feedback on a bunch of statistical measures of randomnessmeasures of randomness

Correlation & CausationCorrelation & Causation

Correlation, Causation, and Correlation, Causation, and ControlControl

One of the most common judgments One of the most common judgments people make is the judgment of people make is the judgment of correlation between different correlation between different variablesvariables

How do you judge correlations?How do you judge correlations? By what happened?By what happened? By what you think?By what you think? By what didnBy what didn’’t happened?t happened? Or something else?Or something else?

Correlation, Causation, and Correlation, Causation, and ControlControl

Incorrect judgment of correlationIncorrect judgment of correlation Wrong method, focus on the part of positive Wrong method, focus on the part of positive

cases (Symptom-Disease)cases (Symptom-Disease) Data incompleteness (God-Prayer)Data incompleteness (God-Prayer)

Illusory correlation (reason not clearly)Illusory correlation (reason not clearly) Based on expectations (Representativeness Based on expectations (Representativeness

theory)theory) Based on salient facts (Availability theory)Based on salient facts (Availability theory)

Invisible correlationInvisible correlation With only observations, even strong correlation With only observations, even strong correlation

can not be detected (Smoking-Lung Cancer)can not be detected (Smoking-Lung Cancer) Result in underestimate the correlation (0.80 Result in underestimate the correlation (0.80 ––

50%, 1.00 50%, 1.00 –– <85%) <85%)

Correlation, Causation, and Correlation, Causation, and ControlControl

How to estimate correlation?How to estimate correlation? Decide variables that may be relatedDecide variables that may be related Sample the cases from the population Sample the cases from the population

under consideration such as under consideration such as randomnessrandomness

Interpret and classify your observationsInterpret and classify your observations Integrate the estimates in a meaningful Integrate the estimates in a meaningful

way and start statistical analysisway and start statistical analysis Use these data to make a judgment Use these data to make a judgment

about correlationabout correlation

Correlation, Causation, and Correlation, Causation, and ControlControl

Correlation does not necessarily Correlation does not necessarily means causation (Causation + means causation (Causation + Correlation = Causalation)Correlation = Causalation)

Causation does not necessarily Causation does not necessarily means a STRONG correlationmeans a STRONG correlation

People often judge correlation People often judge correlation simply with the help of causation simply with the help of causation (accurate correlation, a few cases, or (accurate correlation, a few cases, or knowledge)knowledge)

Correlation, Causation, and Correlation, Causation, and ControlControl

Illusion controlIllusion control People believe they can have more People believe they can have more

control than they actually do in control than they actually do in some certain situations, such as some certain situations, such as cues, etc.cues, etc.

People believe they can have more People believe they can have more control with things they are control with things they are familiarfamiliar

Attribution TheoryAttribution Theory

How people explain others behavior? How people explain others behavior? What is the attribution? (Correlations What is the attribution? (Correlations between behavior and explanation)between behavior and explanation) Person, Stimulus (Entity), Circumstance Person, Stimulus (Entity), Circumstance

(Time)(Time) These three attributions based on These three attributions based on

three sources of informationthree sources of information Consensus, Distinctiveness, ConsistencyConsensus, Distinctiveness, Consistency

People tend to ignore the consensus People tend to ignore the consensus information that is abstract in their information that is abstract in their judgment of attributionsjudgment of attributions

Attribution TheoryAttribution Theory

Predicted Predicted AttributiAttributi

onon

PATTERN OF INFORMATIONPATTERN OF INFORMATION

ConsensusConsensus DistinctiveneDistinctivenessss

ConsistencyConsistency

PersonPerson LowLow LowLow HighHigh

StimulusStimulus

(Entity)(Entity)HighHigh HighHigh HighHigh

CircumstaCircumstancence

(Time)(Time)

LowLow HighHigh LowLow

This table is adapted from an article by Bruce Orvis, John Cunningham, and Harold Kelley (1975).

Attribution TheoryAttribution Theory Disposition vs. Situation (Fundamental Disposition vs. Situation (Fundamental

attribution error)attribution error) People often judge attributions as disposition People often judge attributions as disposition

when they only see the behavior or reaction of when they only see the behavior or reaction of subject rather than situation of the subject subject rather than situation of the subject faces (trading places)faces (trading places)

Salient information has more impact in Salient information has more impact in peoplepeople’’s judgment of attributionss judgment of attributions

ExamplesExamples People tends to attribute to situations when People tends to attribute to situations when

explaining their own behaviorexplaining their own behavior People tends to attribute to dispositions when People tends to attribute to dispositions when

explaining others behaviorexplaining others behavior

Attribution TheoryAttribution Theory

Other attributional biases / errorsOther attributional biases / errors Egocentric bias: people tend to accept Egocentric bias: people tend to accept

more responsibility for joint outcomes more responsibility for joint outcomes than other contributors attribute to themthan other contributors attribute to them

Positivity effect: people tend to attribute Positivity effect: people tend to attribute positive behaviors to dispositional positive behaviors to dispositional factors and negative behaviors to factors and negative behaviors to situational factors (The bedrock situational factors (The bedrock assumption of racist doctrine)assumption of racist doctrine)

Tendency to ascribe less variability to Tendency to ascribe less variability to others than to one selfothers than to one self

Section VSection V

The Social Side of Judgment The Social Side of Judgment and Decision Makingand Decision Making

Social InfluencesSocial Influences• Social Facilitation

• Social Loafing

• Bystander Intervention

• Social Comparison Theory

• Social Analgesia

• Conformity

• Minority Influence

• Groupthink

Social FacilitationSocial Facilitation

• Robert Zajonc, 1965• The performance of simple, well learned

responses is usually enhanced by the presence of onlookers, but the performance of complex unmastered skills tends to be impaired by the presence of others

• College Pool Hall Study – Michaels..et al, 1982

Social LoafingSocial Loafing

• Latane, Williams, Harking, 1979

• People do not work as hard in groups as they work alone

• Pulling Rope Study – Walther Moede, 1927

Bystander InterventionBystander Intervention

• Latane, Darley, 1969, 1970

• The relationship between intervention and diffusion of responsibility

• White Smoke in Waiting Room Study – Latane, Darley, 1969, 1970

Social Comparison TheorySocial Comparison Theory

• Leon Festinger, 1954

• People have the need to evaluate their ability levels and appropriateness of their opinions, and that in the absence of objective nonsocial standards, they compare themselves with others

• Envelope, Lost Wallet, and Letter Experiment – Hornstein, Fisch, and Holmes, 1968

Social AnalgesiaSocial Analgesia

• Craig, Prkachin, 1978

• Social Comparisons with someone who has a high pain tolerance can actually lead people to experience less pain than they would otherwise

• Electric Shocks to the Arm Experiment – Craig, Prkachin, 1978

ConformityConformity

• Solomon Asch, 1951-1956

• Under certain conditions people succumb to the pressure to conform, even when they know it is incorrect

• Standard Line Experiment – Asch, 1951-1956

Minority InfluenceMinority Influence

• Serge Moscovici, 1969

• Cases where a minority is able to exert a significant degree of influence in the majority, if the minority is consistent

• Moscovici, 1969

Group ThinkGroup Think

• Irving Janis, 1972• When groups are cohesive and relatively

insulated from the influence of outsiders, group loyalty and pressures to conform can lead to groupthink

• Defined as a deterioration of mental efficiency, reality testing, and moral judgment that results from in-group pressures

Group Judgments and DecisionsGroup Judgments and Decisions

• Group Errors and Biases

• Group Polarization

• Group Decision Making

Group Errors and BiasesGroup Errors and Biases

• Allison and Messick, 1985

• Attributional parallel to the Fundamental Attribution Error and Self-Serving biases for Groups.

• Defined as the unwarranted dispositional attributions about a group

• Intercollegiate Athlete Study – Taylor, Doria, 1981

Group PolarizationGroup Polarization

• Moscovici and Zallavoni, 1969

• The tendency for group discussion to amplify the inclinations of group members, first documented by James Stoner, 1961

• Risky Shifts Experiment – Kogan and Wallach, 1964

Group Decision MakingGroup Decision Making

• Permissive Leadership vs Inactive Leader– Horse-Sense Experiment – Mailer, Allen 1952

• Group Accuracy– Group Accuracy depends on a variety of

factors, including nature, difficulty of tasks, competence, and member interaction – Hastie, 1986

• Group Decision Techniques– Sniezek (1989) compared 5 decision

techniques: consensus, dialectic, dictator, delphi, and collective

Discussion Questions??Discussion Questions??

• Why do these theories matter in this day and age?

• How can they affect our research and experiment design?

Section VISection VI

Common TrapsCommon Traps

OverconfidenceOverconfidence

• The Case of Joseph Kidd – Oscamp 1965• Greatest when accuracy is near chance

levels• Decreases as accuracy increases from 50

to 80 percent– Under confident when accuracy exceeds 80%

• Discrepancies between accuracy and confidence are not related to a decision makers intelligence

OverconfidenceOverconfidence

• Extreme Confidence– Fischhoff, Slovic, Lichtenstein - 1977

• Calibration– The degree to which a decision makers confidence

matches his/her accuracy

• Correlation of Confidence and Accuracy??– Studies have found little or no correlation between

confidence and accuracy (Paese, 1991)

• How Can Overconfidence Be Reduced?– Feedback and opposing reasons/alternative outcomes

Self-Fulfilling PropheciesSelf-Fulfilling Prophecies

• Termed coined by Robert Merton - 1948

• Self-Perpetuating Social Beliefs– Confirmation Biases (Snyder, Cantor - 1979)

• The Pygmalion Effect – Grade School Student-Teacher Experiment

(Rosenthal and Jacobson – 1968)

• Self-Fulfilling Racial Stereotypes– Word, Zanna, Cooper racial discrimination

experiment - 1974

Behavioral TrapsBehavioral Traps

• Time Delay Traps– Momentary gratification clashes with long-

term consequences

• Ignorance Traps– The negative consequences of behavior are

not understood or foreseen

• Investment Traps– Occur when prior expenditures of time,

money, or other resources lead people to make choices the would not otherwise make

Behavioral TrapsBehavioral Traps

• Deterioration Traps– Occur when initially rewarding courses of

action gradually become less reinforcing and/or more punishing

• Collective Traps– In the pursuit of individual self-interests result

in adverse consequences for the collective– Prisoner’s Dilemma

Discussion Questions??Discussion Questions??

• How much would you pay for a dollar?

• When does miscalibration become devastating?

• Can confirmation biases be eliminated? Mitigated or reduced?

• Are Behavioral Traps inherently Good or Bad?