Decision Makingand

Reasoning

CHAPTER 12

Elyza Mae Buenavista

Elme Villalva

REPORTED BY

Judgementand

Decision Making

Used to select from choices or to

evaluate opportunities

Classical Decisions Theory

Actions

Conditions

Outcomes

EconomicMan and Woman

• Decision makers are fully informed regarding all possible options for their decisions and all possible outcomes of their decision options• Infinitely sensitive to subtle distinctions among decision options• Fully rational regarding to their choice of options

Subjective Utility• based on the individual’s judged

weightings of utility, rather than on objective criteriaSubjective Probability

• – based on the individual’s estimates of likelihood, rather than on objective statistical computations

Subjective Expected Utility

Theory

Satisficing - We do not consider all

possible options and then carefully compute which of the entire universe of options will maximize our gains and minimize our losses rather, we consider options one by one, and then we select an option as soon as we find one that is satisfactory or just good enough to meet our minimum level of acceptability

Elimination By Aspects- offers a behavioral explanation of the choice process that accounts for both the process of choice set formation (definition of consideration sets) and the observed substitutability between options

HEURISTICSAND

BIASES

Representativeness - judge membership in a

class similarity to stereotypes

• PROBLEM:1. All the families having exactly six children in a particular city were surveyed. In 72 of the families, the exact order of births of boys and girls was GBGBBG (G girl; B boy).

What is your estimate of the number of families surveyed in which the exact order of births is BGBBBB?

2. Susan is very shy and withdrawn, invariably helpful but with little interest in people or in the world of reality. A meek and tidy soul, she has a need for order and structure, and a passion for detail. Is Susan a Librarian, a Teacher, or a Lawyer?

3. Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations. Is Linda a Bank Teller? Is Linda a feminist Bank Teller?

- to judge likelihood or frequency of event,

occurrence

Availability

PROBLEM: Consider these pairs of causes of death:• Lung Cancer vs. Motor Vehicle Accidents• Emphysema vs. Homicide• Tuberculosis vs. Fire and Flames

From each pair, choose the one you think causes more

deaths in the US each year.

- Used to estimate value or size of

quantity

Anchoring-and-AdjustmentHeuristics

Framing example:1. A rare disease has broken out, which is expected to kill 600 people. There are two possible programs to combat it, but they cannot both be used. The consequences of each are known:

A. 200 saved with certainty

B. 600 saved with a probability of .33

Which would you choose? Why?

2. A rare disease has broken out, which is expected to kill 600 people. There are two possible programs to combat it, but they cannot both be used. The consequences of each are known:

A. 400 die for certainB. 600 die with a

probability of .67 Which would you choose? Why?

Illusory CorrelationWe tend to see

particular events or particular attribute and categories as

going together because we are

disposed to do so (Hamilton & Lickel

2000)

EXAMPLES:• Sugar makes children hyperactive• Infertile couples conceive after

adoption–Based on an overemphasis on dramatic rare results and ignoring common results.

• The Myth of Hot Hand (Gilovich, Vallone & Tversky, 1985)• Belief that a professional basketball player is more likely to make a shot after they have just made a basket, than they have just missed one.

Deductive Reasoning• Proposition - an assertion,

which may be either true of false• Premise - propositions about

which arguments are made

Conditional Reasoning• Modus ponens–The person affirms the antecedent

• Modus tollens –The person denies the consequent

Pragmatic Reasoning Schemas

- general organizing principles or rules related to particular kinds of goals

such as permissions, obligation, or causation.

Syllogistic ReasoningSyllogisms – deductive arguments that involve drawing conclusions from two premises.

Major Term •in the major premise forms the predicate of the conclusion

Minor Term • in the minor premise forms the subject of the conclusion

Middle Term •the categorical term

Example:Major Premise: All birds are

animals.Minor Premise: All parrots are

birds.Conclusion: All Parrots are

animals.

“animal” is the major term, “parrot” is the minor term, “bird” is the middle term

Linear SyllogismInvolves a quantitative comparison in which each term displays either more or less of a particular attribute or quality, and the reasoner must draw conclusions based on the quantification.

Example:“John is taller than Bill, and Bill is

taller than Pete. Who is the tallest?”

Categorical SyllogismComprise two premise and a conclusion. The premise states something about the category membership of the terms.

Example:Major Premise: All mammals are warm-blooded.Minor Premise: All black dogs are mammals.Conclusion: Therefore, all black dogs are warm-blooded

Further aids and Obstacles to Deductive Reasoning

•We overextend the use of strategies that work in some syllogisms in which the strategies fail us.

Overextension

Errors

•Failure to consider all the possibilities before reaching a conclusion.

ForeclosureEffects

•We seek confirmation rather than disconfirmation of what we really believe.

ConfirmationBias

Inductive ReasoningIn this kind of reasoning, there

is no logical movement from premise to conclusion. The

premises are usually based on facts or observations. There is a possibility that the premise

may be true while the conclusion is false, since there

is no necessary logical relationship between premise

and conclusion.

Reaching Causal Inferences• Stuart Mill proposed a set of

canons-widely accepted heuristics principles on which people may base their judgement. Method of Agreement – make separate list of the possible causes that are present and those that are absent when a given outcomes occur.

Method of Difference – observe that all the circumstances in which a given phenomenon occurs are just like those in which it does not occur except for in one way that they differ

Categorical Inferences• Bottom-up – based on observing

various instances and considering the degree of variability across instances.

• Top-down – selectively searching for constancies with many variations and selectively combining existing categories and concepts

Reasoning by Analogy• Ex: Fire is to asbestos as water is to (a)

vinyl (b) air (c) cotton.The reasoner must observe the first pair of items and must induce from those two items one or more relations.

Developmental of Inductive Reasoning

The changes in reasoning about factors in these domains appear to

show enhanced understanding of the relationship between appearance and deeper functional principles.

An Alternative View of Reasoning

Steven Sloman suggested that people have two distinct systems of reasoning:

Associative System – sensitive to observed similarities and temporal contiguities

Rule-based System – involves manipulations based on relations among symbols

END