Heuristics And Decision Making Theories

Reviewing Activities

First activity has a demonstration of overconfidence and confidence ratings. Due to a cognitive dissonance, Americans with the preset values of democracy would not consider themselves as invaders. (Well, some my not after the Iraq war.) “The concept of overconfidence is based on a large body of evidence from cognitive psychological experiments and surveys showing that individuals overestimate their own abilities or knowledge as well as the precision of their information.” (Definition) Case studies by Oskamp (1965) found that a people’s confidence in their decisions does not necessarily increase the accuracy of their decisions. In fact, this is the danger of overconfidence.

The second activity illustrates calibration. “Calibration is the degree to which confidence matches accuracy.” (Plous, 1993, p. 222) Decision makers accuracy is based on the amount of times he/she choices the correct alternative. Asking what is the probability of an answer being correct is requires that the calculation be compared against something or someone else. There may be an anchoring affect of a decision maker to think that confidence and accuracy increase at the same level. However, “when individual judgments are considered alone, we cannot adequately measure calibration. According to Linchenstein, Fischhoff and Phillips (1984) the only way to validly assess calibration is by comparing accuracy and confidence across hundreds of judgments. (Plous, p. 222)

The heuristic “positive test strategy” or confirm the rule is considered an all-purpose heuristic. (Plous, P. 233) In activity three, this is demonstrated as decision makers are given a rule “verify the even number vowel paired cards”. The confirmation of the rule requires that the decision maker choose alternatives that would prove it. “In other words, most students chose to turn over cards capable of confirming the statement.” (Plous, p. 232)

Lastly, investment traps occur when prior expenditures of time, money, or other resources lead people to make decisions they would not otherwise make.” (Plous, p. 243) According to Anderson (2004) to “the more actions you have already taken on behalf of a choice or direction, the more difficult you will find it to change direction or make a different choice.” This is a further example of endowment effect. It seems to me that a person is pouring “throwing good money after the bad”, however, that is only after the decision maker realizes there was a mistake. There is a sense of ownership or tie to a process, therefore the decision maker continues even erroneously to expend more resources to

Relative decision making

People make decisions using a host of reasoning processes. According to Anderson “we use unconscious routines, called heuristics, to cope with the complexity inherent in decision-making.” (Anderson, 2004) But all rationales seem to make sense to the decision maker at the time, else why would they be chosen?

Problematic decision