CHAPTER 12: DECISIONG MAKING

AND REASONING
HEURISTICS:
Satisficing
Judgment and Decision Making
 We consider options one by one, and
Classical Decision Theory then we select an option as soon as
we find one that is satisfactory or just
 The earliest models of how people
good enough to meet our minimum
make decisions.
level of acceptability.
The Model of Economic Man and Woman  One of the first heuristics that was
formulated by researchers (Simon,
This model assumed three things:
1957).
1. Decision makers are fully informed
Elimination by Aspects
regarding all possible options for their
decisions and of all possible outcomes of  Eliminate alternatives by focusing on
their decision options. aspects of each alternative, one at a
time, instead of mentally
2. They are infinitely sensitive to the subtle
manipulating all the weighted
distinctions among decision options.
attributes of all the available options.
3. They are fully rational in regard to their
Conditional Probability
choice of options (Edwards, 1954; see also
Slovic, 1990)  is the probability of an event
occurring given that another event
Subjective Expected Utility Theory
has already occurred.
 According to subjective expected
Bayes’s Theorem
utility theory, the goal of human
action is to seek pleasure and avoid  The formula for calculating
pain. conditional probabilities in light of
evidence.
In doing so, however, we calculate two
things. (Subjective utility & Subjective Representativeness Heuristic
probability)
 (Tversky & Kahneman, 1982)
 Subjective utility - A calculation explains the tendency of people to
based on the individual’s judged judge probabilities or likelihoods
weightings of utility (value), rather according to how much more one
than on objective criteria. thing resembles another
 Subjective probability – A calculation
based on the individual’s estimates of
likelihood, rather than on objective Availability Heuristic
statistical computations.
  Most of us at least occasionally use particular outcome (Fischhoff, 1982;
the availability heuristic, in which Wasserman, Lempert, & Hastie,
we make judgments on the basis of 1991)
how easily we can call to mind what
we perceive as relevant instances of
a phenomenon FALLACIES
Anchoring Gambler’s Fallacy
 A heuristic related to availability is  Is a mistaken belief that the
the anchoring and adjustment probability of a given random event,
heuristic, by which people adjust such as winning or losing at a game
their evaluations of things by means of chance, is influenced by previous
of certain reference points called end random events.
anchors.
Hot Hand Effect
Framing
 A tendency opposite to that of
 Which the way that the options are gambler’s.
presented influences the selection of  It refers to a belief that a certain
an option (Tversky & Kahneman, course of events will continue.
1981)
Conjunction Fallacies
 An individual gives a higher estimate
BIASES: for a subset of events than for the
larger set of events containing the
Illusory Correlation
given subset.
 We are predisposed to see particular
events or attributes and categories as
going together, even when they do Do Heuristics Help Us?
not.
 Heuristics do not always lead to
Overconfidence wrong judgments or poor decisions
(Cohen, 1981). Indeed, we use these
 An individual’s overvaluation of her
mental shortcuts because they are so
or his own skills, knowledge, or
often right. Sometimes, they are
judgment
amazingly simple ways of drawing
Hindsight Bias sound conclusions.
 Occurs when we look at a situation
retrospectively, and we believe we Opportunity Costs
easily could have seen in advance all
- Opportunity costs are the prices
the signs and events that led up to a
paid for availing oneself of
 certain opportunities. Taking  members agree on acceptable group
opportunity costs into account is behavior.
important when judgments are
made.
Groupthink
- Groupthink is a phenomenon
Naturalistic Decision Making characterized by premature
decision making that is generally
- Naturalistic decision making
the result of group members
(NDM) is the process by which
attempting to avoid conflict
people use their experience to
make decisions in complex real-
- Groupthink frequently results in
world environments.
suboptimal decision making that
avoids nontraditional ideas
(Esser, 1998). What conditions
Group decision-making.
lead to groupthink? Janis (1971)
- Group decision-making is where cited three kinds:
a group of individuals are 1.an isolated, cohesive, and
brought together in hopes of homogeneous group is empowered to
determining a solution to a make decisions
problem. 2. objective and impartial leadership
is absent, within the group or outside
it; and
Benefits of Group Decisions
3. high levels of stress impinge on
- Working as a group can enhance the group decision making process
the effectiveness of decision
making, just as it can enhance the
But what exactly is groupthink? Janis
effectiveness of problem solving.
(1971) delineated six symptoms of
Many companies combine
groupthink:
individuals into teams to improve
decision making 1. Closed mindedness—the group is
not open to alternative ideas.
- Groups that are successful in 2. Rationalization—the group goes to
decision making exhibit a great lengths to justify both the
number of similar characteristics, process and the product of its
including the following: decision making, distorting reality
 the group is small where necessary in order to be
 it has open communication persuasive.
 members share a common mind-set
 members identify with the group
 3. Squelching of dissent—those who Type of deductive reasoning
disagree with the group are ignored,
 Conditional Reasoning -
criticized, or even ostracized.
the reasoner must draw a
4. Formation of a “mindguard” for
conclusion based on an if-
the group—one person appoints then proposition.
himself or herself the keeper of the
group norm and ensures that people “If p, then q. p. Therefore, q.”
stay in line Modus ponens – Argues that the
5. Feeling invulnerable—the group reasoner affirms the antecedent
believes that it must be right, given (p).
the intelligence of its members and
the information available to them. Modus Tollens – Argues that the
6. Feeling unanimous—members reasoner denies the Consequent
believe that everyone unanimously (q)
shares the opinions expressed by the
group.

Antidotes for Groupthink

- Janis (1971) has prescribed

several antidotes for groupthink
and iverse perspectives, critical
The Wason Selection Task
evaluation.
-
Deductive reasoning

- The process of reasoning

from one or more general
statements regarding
what is known to reach a
logically certain
conclusion.

Deductive reasoning is based on

logical propositions. A proposition
Influences on Conditional
is basically an assertion, which may
Reasoning
be either true or false.
How do people use deductive
Premises are propositions about
reasoning in realistic situations?
which arguments are made.
Pragmatic reasoning schemas There are four kinds of
are general organizing principles or premises:
rules related to particular kinds of
goals, such as permissions, 1. Universal affirmative
obligations, or causations. These statements: Statements of the
schemas sometimes are referred to form “All A are B” because they
as pragmatic rules. make a positive (affirmative)
statement about all members of a
Pragmatic reasoning schemas help class (universal).
us deduce what might reasonably
be true. Particular situations or 2. Universal negative
contexts activate particular statements: negative statements
schemas. about all members of a class (“No
cognitive psychologists are
flutists.”).
 Syllogistic Reasoning:
Categorical Syllogisms 3. Particular affirmative
- Other key type of statements: positive statements
deductive reasoning is about some members of a class
syllogistic reasoning, (“Some cognitive psychologists are
which is based on the use left-handed.”).
of syllogisms. Syllogisms
are deductive arguments 4. Particular negative
that involve drawing statements: negative statements
conclusions from two about some members of a class
premises. (“Some cognitive psychologists are
Categorical syllogism – The not physicists.”)
premises state something about
the category memberships of the
terms. Heuristics in Deductive Reasoning
An example of a categorical
Heuristics in syllogistic reasoning
syllogism follows:
include overextension errors. In
Premise 1: All cognitive
these errors, we overextend the
psychologists are pianists.
use of strategies that work in some
Premise 2: All pianists are
syllogisms to syllogisms in which
athletes.
the strategies fail us.
Conclusion: Therefore, all
cognitive psychologists are We also experience foreclosure
athletes. effects when we fail to consider all
the possibilities before reaching a - We stop searching for additional
conclusion. alternative or contributing causes
of a phenomenon.
In addition, premise-phrasing
effects may lead us to leap to a
conclusion without adequately Categorical Inferences
reflecting on the deductive validity
of the syllogism. - One makes a judgment about
whether something is, or likely to
be, a member of a certain
category
Biases in Deductive Reasoning
Bottom-up strategy - based on observing
In confirmation bias, we seek various instances and considering the degree
confirmation rather than of variability across instances.
disconfirmation, or rejection, of Top-down strategy - selectively searching
what we already believe. for constancies within many variations and
selectively combining existing concepts and
Inductive Reasoning categories.

- The process of reasoning from

specific facts or observations to Reasoning by Analogy
reach likely conclusion that may
explain the facts. - Is a kind of reasoning that is
based on finding a common
Causal Inferences relational system between two
- How people make judgements situations, exemplars, or
about whether something causes domains. When such common
something else, if people see two system can be found, then what is
events paired enough ,they come known about one situation can be
to believe that the first causes the used to infer new information
second. about the other.

1.It may be that Factor A causes Factor B

2.It may be that Factor B causes Factor A Examples:

3.Some higher order, Factor C may cause Yesterday: Tomorrow March: ?

Factor A and B to occur together. (a) April (b). May (c.) June (d.)
Discounting Error July
 common and more appropriate than
those of other or people.

Rule-based System
which involves manipulations based on the
relations among symbols.

Evidence in favor of rule-based reasoning

includes the

An Alternative View of Reasoning following:

- Dual-process theory contends 1. We can recognize logical arguments when

that two complementary systems they are explained to us.
of reasoning can be 2. We can recognize the need to make
distinguished; associative system categorizations based on defining features
and rule-based system.
despite similarities in typical features.
3. We can rule out impossibilities,
Associative System
4. We can recognize many improbabilities.
 which involves mental operations
based on observed similarities and
temporal contiguities (i.e., tendencies
for things to occur close together in
time) NEUROSCIENCE OF REASONING
 process of reasoning involves the
prefrontal cortex
EXAMPLE OF ASSOCIATIVE  reasoning involves brain areas
Belief Bias Effect associated with working memory,
such as the basal ganglia
 occurs when we agree more with  the basal ganglia are involved in a
syllogisms that affirm our beliefs, variety of functions, including
whether these syllogisms are cognition and learning.
logically valid.
False Consensus Effect
 people believe that their own
behavior and judgments are more