Psychology: Decision Theory and Hot Hand Essay

Submitted By Melody Yichen-Xu
Words: 1607
Pages: 7

Heuristics and Biases in Judicial Decisions

1.Judgment vs. decision making

Judgement: the mental or intellectual process of forming an opinion or evaluation by comparing and discerning. e.g predictions estimations evaluations

Decision Making: the act of settling or terminating by giving judgement e.g choice between alternatives

2.Historical events leading to the establishment of the field
1800s-1900s
Wundt: Introspection
Ebbinghaus: Nonsense syllables
Bartlett: Memory in context
William James: Stream of Consciousness

20th century
Behaviorism: Watson Skinner (America)
Gestalt Psychology: Perception and Illusion (Europe)

Recent
Von Neumann and Morgenstern: “Theory of Games and Economic Behavior” (1948)
Invented modern decision theory

Paul Meehl “Clinical vs. Statistical Prediction” (1954)
Compared judges to mathematical models

The emergence of contemporary cognitive science(1960s)
Disappointment w/behaviorism
Linguistics
Memory Research
Computers and Information Processing

3. Descriptive, normative, prescriptive
Normative question: how should jdm be evaluated?
Descriptive question: how do we make judgments and decisions? prescriptive question: what can we do to improve jdm? e.g training studies

4. Criteria for rationality
Broadly: in the best of the person making the decision; whatever kind of thinking helps people achieve their goals

Four criteria:
Based on the dm’s current assets
Based on the possible consequence of choice
When outcomes are uncertain, likelihood evaluated according to probability
Choice is adaptive within the constraints of the above probabilities and the values and satisfactions associated with each consequence of choice

5. Expected Utility Theory
Concerned with making a tradeoff between the probability of an outcome and its utility
Maximizing expected utility utility is subjective and respects the variety of human goals; represents whatever people want to achieve; value=prob*amount to be won

6. Sunk cost
Throwing good money after bad sunk costs are irrelevant to current decision, instead only incremental costs should influence future decisions
Instruction in sunk costs can reduce the incidence of sunk cost effects but it depends on the nature or the context of the problem

7. Lens mode
The framework is divided into two halves, one representing the psychological events inside the mind of the person making judgment and the other representing events and relationships in the “real world” in which the person is situated

Example: Stock market managers; wine tasters; criminal profilers; sportswriters

Low performance: rely on relatively few cues; most judgments rely on “linearity”; judges lack insight into their policies; some low inter-judge agreement; unrelated information can influence judgements (dilution effect)

8.Clinical vs. actuarial judgment
Paul Meehl(1954) compared psychologists and psychiatrists to linear model
Why clinical judgment inaccurate? 1. Cognitive limitations(difficulty attending to 2 or more variables) 2. Lack of awareness of biases (hindsight, under-use of base rates, availability, anchoring) 3. Over confidence

Dawes, Faust, Meefl(1989) Judges perform not as well as the Goldberg Rule

Meta-Analysis: on average actuarial methods were about 10% more accurate than clinical predictions 9. Linear models

10.Heuristics
Mental short cuts used in judgement and decision-making; a rule of thumb that is fast and frugal
Kahneman and Tversky 1974 Science Nobel Prize 2002

11.Availability
Events are judged more likely to the extent that they are vivid or easily recalled
Heuristic: Frequency or probability is estimated according to the ease with which instances are brought to mind
e.g. more stomach cancer deaths than traffic accidents; scanning memory(letter estimates k in 1st or 3re position); Recency and availability; familiarity and availability
Bias: under influence of factors like salience of information, vividness, personal relevance factors that may be unrelated to the…