PSY 345 Lecture Notes - Lecture 13: Wine Bottle, Representativeness Heuristic, Affective Forecasting
Thursday, November 30, 2017
Judgment and Decision Making
Judgment and Decision Making
- Research has suggested that an average person makes about 200 decisions per day about
FOOD alone
- This is 1 example of millions of ways we have to make decisions between 1 course of
action from thousands of other actions on any given day
- Most decisions aren’t life-changing, but each choice directs a person’s life in a specific
direction
- For example: professor’s example of waking up in the morning, and choosing what time
to do so
- Incorrect diagnosis by hospital employees kills 60,000 people/year in the US
- The leading cause of death in the US is heart disease, cancer, lung disease, and accidents.
Death may/may not be directly related to a single decision, but similar decisions made
over time could contribute to greater probability of fatality
- Poor diet, lack of exercise, smoking, alcohol, risk taking, etc.
Judgment
- “Judgment is perceiving objects or events and coming to a conclusion about whether
they are good or bad (valence judgments) or likely to occur (likelihood judgments)” – p.
734
- A judgment may seem like an attitude (as we have learned in previous lectures).
However, attitudes generally precede judgments and exist as internal cognitions.
Judgments typically involve generating some form of confirmatory cognition, which
alters behavior towards an observable decision
Decision
- “A decision is a commitment (to oneself or publically) to an option or course of action
selected from among a set of options. Decisions have outcomes, which are the
circumstances or states that follow from the decision” – p. 734
How do researchers categorize the outcomes of a decision?
- A decision’s utility is a subjective evaluation of the affective implications of a decision’s
outcome (how much joy, pleasure, closure, satisfaction, etc. comes from a particular
course of action)
- Decisions that have outcomes with the most satisfaction, for example, are called
normative (or those decisions that become dominant over time because they are more
functional in achieving goals and positive external/internal states)
- Most social psychologists argue that people are often not rational (despite what their
theories attempt to explain). This is usually evident when trying to predict people’s
future behavior or trying to explain what makes people happy
- For example: praising someone for doing good, which will lead that person continue
producing good work, but if you praise them too much it can desensitize them to the
praise. Decisions that person made (putting extra effort into doing good) that had more
utility (positive feelings) could elicit less utility over time…
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Subjective Expected Utility Theory
- Comes from the study of economics
- This theory states, “people make a decision by determining the likelihood that each
option’s outcome will occur and the value of the outcome in question. Then they multiply
the likelihood and value for each option and compare these across options. Whichever
option as the highest score (i.e., the best combination of being likely to occur and highly
desirable) is the option that people should choose because it will bring them the most
utility” – p. 735
- This is not saying that we carefully and logically calculate all of our decisions in a
rational way…
- This argues that people make decisions based on feelings or cognitions that are
probabilistic (they make decisions that they believe have a high chance of getting what
they want)
- Also argues that the risk/payoff involved in making decisions influences how often
people will make them
- For example: professor’s example of $5 vs. $20 when playing blackjack
- Not always the case
o The people you are with may influence more gambling
o The environment a person is in may influence the amount spent
o The internal emotional/social cognitions a person experiences influences
gambling (less self-awareness from alcohol, feeling positive from wins, etc.)
- Example from textbook about “Who Wants to Be A Millionaire? Game show
Prospect Theory
- Argues that the options (prospects) that decisions makers face are the main contribution
to which decisions they make
- Focuses mostly on how and why people make irrational decisions compared with
rational decisions. Generally speaking, when there are less prospects for making
decisions, people are likely to make more rational/valuable decisions with greater payoffs
compared to when there are more options
- Establishes that people’s relative point of view at any given time influences the decisions
and judgments being made. This allows theorists to explain how a person’s decisions are
based on their position in society, age, environment, etc. at the time. This, the same
valuable decisions may not be made at multiple points in a person’s life because of their
unique perspective at the time of each decision
- For example: example of job offers for under age of 21
- Generally, people are loss aversive. This means that the cognitive impact of losing
something desirable is more influential than the cognitive impact of gaining something
- Research is so in-depth in this area that the authors of the textbook give a fairly confident
estimate – people are impacted twice as much by losses as they are by gains
- For example: breakups and failures vs. hookups and success
- This is also observed in nature with other organisms (including humans). Stimuli
aversion (most commonly known as “food aversion”) is a phenomenon where an
organism will prioritize avoiding a particular stimuli (smell, sound, taste, etc.) if they
experienced an unpleasant sensation (allergic reaction, illness) directly after exposing
themselves to that stimuli
- For example: new energy drink causes a person to throw up
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- Research has shown that when mice and insects were shocked or given unpleasant
experiences in the presence of a certain color light, they avoided stimuli with this color
altogether over time
- Their offspring also tended to do this… even when they were separated from their parents
and were never taught to fear these colors in the first place
- There is some indication that survival instincts/decision making processes that involve
stimuli aversion are genetic
- In less life threatening (more socially relevant situations), people’s choices are less
consistent. A person may repeatedly make decisions that are bad for their health, social
reputation, finances, etc.
- The majority of research points to the notion that “bad is stronger than good”. It takes
double the positive interactions in a social relationship to make up for one negative
interaction
Endowment Effect
- A very famous research experiment by Kahneman, Knetch, and Thaler (1990), separated
students into 2 groups – members of one group were given a small gift with the
university’s logo on it, while members of the other student group see the same items but
aren’t told that they will receive them as gifts
- Those who get the gifts were asked how much they would charge to sell it and those who
didn’t get the gifts are asked how much they would offer to buy it. Remarkably, people
who received the gift ask for considerably more money to sell their items than people
who did not receive the gift were willing to offer to buy it for
- Some theorists explain this observed behavior can be explained by loss aversion –
possessing the items makes losing these items worse, and people wanted more in return
for losing them than buyers were willing to pay
What other ways do people use irrational judgments to make decisions?
- People tend to overestimate the chances of unlikely events occurring (terrorist attacks,
winning the lottery, murder)
- In reality, being killed by some appliance in your kitchen is much more likely than being
killed by a shark, but the latter examples is estimated to be a more realistic threat to
safety (an might lead a person to avoid swimming in the ocean)
- Constructed Preferences are “values that people associate with different outcomes are
not stable but rather can be altered by the situation” – p. 737
o For example: a person can persist in doing something they no longer enjoy
because they have invested time, money, effort, etc. into the activity. Women in
abusive relationships demonstrated the sunken cost effect by staying in these
relationships that they no longer valued or were dangerous to their safety. Many
reported returning to abusive partners because they had invested time, money, and
effort into trying to make the relationship work (and didn’t want to lose the
work/resources built up over the relationship)
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Document Summary
Research has suggested that an average person makes about 200 decisions per day about. This is 1 example of millions of ways we have to make decisions between 1 course of action from thousands of other actions on any given day. Most decisions aren"t life-changing, but each choice directs a person"s life in a specific direction. For example: professor"s example of waking up in the morning, and choosing what time to do so. Incorrect diagnosis by hospital employees kills 60,000 people/year in the us. The leading cause of death in the us is heart disease, cancer, lung disease, and accidents. Death may/may not be directly related to a single decision, but similar decisions made over time could contribute to greater probability of fatality. Poor diet, lack of exercise, smoking, alcohol, risk taking, etc. Judgment is perceiving objects or events and coming to a conclusion about whether they are good or bad (valence judgments) or likely to occur (likelihood judgments) p.
