Judgment Heuristics and Biases
Try these cases yourself.
A. A cab was involved in a hit-and-run accident.
Two cab companies serve the city: the Green, which operates 85% of the
cabs, and the Blue, which operates the remaining 15%. A witness identifies
the hit-and-run cab as Blue. When the court tests the reliability of the
witness under circumstances similar to those on the night of the accident,
he correctly identifies the color of the cab 80% of the time and misidentifies
it 20% of the time. What is the probability that the cab involved in the
accident was Blue, as the witness stated?
B. You've reserved a seat for a Broadway
play for which the ticket price is $40. As you enter the theater to buy
your ticket, you discover you've lost $40 from your pocket. Would you still
buy the ticket? (Assume you still have enough left to do so.)
C. Linda is 31, single, outspoken, and very
bright. She majored in philosophy in college. As a student, she was deeply
concerned with discrimination and other social issues, and participated
in anti-nuclear demonstrations. Which statement is more likely?
D. Threatened by a superior force, the general
faces a dilemma. Her intelligence officers say her soldiers will be caught
in an ambush in which 600 of them will die unless she leads them to safety
by one of two available routes. If she takes the first route, 200 of her
soldiers will be saved. If she takes the second, there's a one-third chance
that 600 soldiers will be saved and a two-thirds chance that none will
be saved. Which route should she take?
E. A certain town is served by two hospitals.
In the larger hospital about 45 babies are born each day, and in the smaller
hospital about 15 babies are born each day. Although the overall proportion
of boys is about 50%, that actual proportion at either hospital may be
greater or less that 50% on any given day. At the end of the year, which
hospital will have the greater number of days on which more that 60% of
the babies born were boys?
a. the large hospital
b. the small hospital
c. neither, it is equally probable
F. An urn is filled with with white balls and
black balls. You know that two-thirds of the balls are of one color and
one-third are of the other, but you don't know which color predominates.
One blindfolded person plunges a hand into the urn and comes up with three
black balls and one white ball. Another uses both hands and comes up with
14 black balls and ten white balls. Both samples suggest that black balls
are more numerous. But which sample produces the more convincing evidence?
G. Choose between
H. You've decided to see a Broadway play and
have bought a $40 ticket. As you enter the theater, you realize you've
lost your ticket. you can't remember the seat number so you can't prove
to the management that you bought a ticket. Would you spend $40 for a new
ticket?
I. Threatened by a superior force, the general
has to choose between two escape routes. Her aides tell her that if she
takes the first, 400 soldiers will die. If she takes the second, there's
a one-third chance that no soldier will die, and a two-thirds chance that
600 soldiers will die. Which route should she take?
J. Choose between
Outline
I. What is a "judgment heuristic?"
II. The representativeness heuristic
III. The availability heuristic
IV. Adjustment and anchoring
V. Risk and loss aversion
I. What is a "judgment heuristic?"
A. Judgemental heuristics are principles or
methods by which one makes assessments or judgements of probability simpler.
B. These heuristic are often very useful
but sometimes they lead to systematic errors.
II. The representativeness heuristic
A. An event is judged to be probable to the
extent that it represents the essential features of the parent population
or of its generating process.
B. The heuristic is useful in inductive
reasoning. For example, if we want to know how likely it is that Jones
will pass the course we might consider the degree to which Jones represents
that group of students who pass.
C. The use of this heuristic can, however,
systematically lead one to make poor judgements in some circumstances.
1. Sometimes the manner in which the object
or event is represented makes one insensitive to the prior probabilities
involved.
2. Sometimes the manner in which the object
or event is represented leads one to ignore the basic rules of the probability
calculus, e.g., that the likelihood of a conjunction is always less than
the likelihood of each conjunct taken singly.
3. Sometimes the manner in which the object
or event is represented makes one insensitive to the fact that small samples
are less representative than large samples are.
4. Sometimes the manner in which the object
or event is represented leads one to misconceive the outcome of chance.
For example, some outcomes of a random selection are taken to "look more
random" than equally likely alternatives.
5. Sometimes the manner in which the object
or event is represented makes one insensitive to the fact that, in circumstances
in which random events cluster around a mean or average, extraordinary
events are likely to be followed by more ordinary ones (regression to the
mean). People tend to think that extreme instances are representative of
future instances.
III. The availability heuristic
A. One's judgement about the relative frequency
of an event often depends upon the availability or accessability of objects
or events in the processes of perception, memory or construction in the
imagination.
B. This heuristic is useful in inductive
reasoning because (1) typically instances of large classes are recalled
better and faster than instances of small groups, (2) likely events are
often easier to imagine, (3) causal connections are repeatable and therefore
more likely to be remembered. When the availability is associated with
the objective likelihood of an event, this heuristic is trustworthy.
C. The use of this heuristic can, however,
systematically lead one to make poor judgements in some circumstances.
1. A class whose instances are readily available
might appear to be more numerous than it is.
2. Events that easily come to mind might
be judged more likely than they are.
3. The availability of certain information
may be biased because one has had limited exposure to events of a certain
kind, or because the events are more graphic, remarkable or noticable and
attract more attention, or because one has stored the information in a
particular fashion.
IV. Adjustment and anchoring
A. Conservativism is sometime recommended when
adjusting our beliefs or methods in light of new information. A well established
belief should be overthrown only when one has solid evidence against it.
An otherwise reliable method should be changed only when it meets significant
failure.
B. Insufficient adjustment due to anchoring
can lead to mistakes.
1. Sometimes reasoners hold fast to some
piece of information and ignore the consequences of additional information.
2. When solving a problem involving probabilities,
reasoners may start with an initial value and adjust it to reach a final
value. The anchoring phenomenon results when their results are biased toward
the initial value.
3. Sometimes reasoners anchor to an initial
problem-solving method when a change in methods would be recommended.
V. Risk and loss aversion
A. Many people are adverse to taking risks.
People tend not to bet $500 on a 50% chance of winning $1,000, even though
that is the fair price.
B. But studies show that people would rather
take a risk than suffer a loss. Equivalent problems get different responses
depending on whether the problem is framed in terms of losses or gains.