Judgment and Decision-Making Concepts

Study Notes

Judgment and Decision-Making

Judgment is evaluating evidence to form conclusions.
Decision-making selects alternatives based on judgments.
Both often involve uncertainty and heuristics.

Heuristics

Availability Heuristic: Judging likelihood based on easily recalled examples (e.g., overestimating plane crash frequency).
Representativeness Heuristic: Assessing probability based on resemblance to prototypes (e.g., assuming a quiet, glasses-wearing person is a librarian).
Base Rate Neglect: Ignoring statistical probabilities in favor of other information.

Biases

Confirmation Bias: Seeking confirming evidence, ignoring contradictory data.
Overconfidence Bias: Overestimating judgment accuracy.
Illusory Correlations: Perceiving nonexistent relationships between variables.
Hindsight Bias: Viewing past events as more predictable than they actually were.

Decision-Making Processes

Utility Theory: Making decisions to maximize expected personal benefit (utility).
Expected Utility Formula: Utility = Probability × Value. Used to evaluate decisions with uncertainty, like gambling.
Limitations of Utility Theory: Decisions often influenced by emotions, context, and framing.

Emotions and Decisions

Expected Emotions: Predicting how decisions will make one feel. Fear of loss leads to risk aversion.
Immediate Emotions: Current feelings impacting decisions. Anger can result in impulsive choices.
Integral vs. Incidental Emotions:
- Integral: Emotions directly related to the decision.
- Incidental: Unrelated emotions influencing choices.

Framing Effect

Decisions affected by how choices are presented.
Gain vs. Loss framing: People may react differently to choices framed as gains or losses.

Dual-Process Models

System 1 (Fast, Intuitive): Automatic, effortless, and emotional thinking; quick judgments.
System 2 (Slow, Deliberative): Analytical, effortful, and logical thinking; complex problem-solving.

Reasoning

Deductive Reasoning: Drawing specific conclusions from general premises (using syllogisms). A valid syllogism has true premises leading to a true conclusion.
Inductive Reasoning: Drawing general conclusions from specific observations. Relies on evidence strength rather than certainty.

Errors in Reasoning

Belief Bias: Evaluating arguments based on plausibility instead of logical structure.
Wason Selection Task: Difficulty systematically testing rules; often trying to confirm, not disconfirm, them.

Conditional Reasoning

"If-then" statements; difficulties arise from misinterpreting logical relationships in these statements.

Expertise

Experience and knowledge improve decision-making and reasoning in specific domains; experts use more context-rich knowledge, novices may rely on surface-level details.

Real-World Applications

Biases and heuristics influence medical diagnosis, legal decisions, and financial choices.

Improving Decision-Making

Recognizing and mitigating biases and heuristics.
Learning statistical thinking to evaluate probabilities.
Encouraging analytical thinking by shifting from System 1 processes to System 2.
Considering alternative perspectives to avoid confirmation bias.

Description

This quiz explores key concepts in judgment and decision-making, including heuristics and biases. It covers how individuals evaluate evidence, make choices, and the common pitfalls that can affect their decisions. Test your understanding of availability, representativeness, and the various biases that shape our beliefs.