Transcript Psychological Influences on Personal Probability

Psychological Influences on Personal Probability
Instinct or analysis?
Wouldn't things be easier if we could get emotion out of the way and let rational analysis lead?
Except that so often, that gut feeling turns out to be right. Antoine Bechara, a psychology professor
at USC, tells us about the case of Elliot,an accountant who, after having a tumor removed from his
brain, became entirely rational. - Listen
The term intuition is used to describe "thoughts and preferences that come to mind quickly and
without much reflection".
Intuition (is) perception via the unconscious
– Carl Gustav Jung(1875 – 1961), was a Swiss psychiatrist, an influential thinker, and the founder
of analytical psychology
INTUITION may be defined as understanding or knowing without conscious recourse to thought,
observation or reason. Some see this unmediated process as somehow mystical while others
describe intuition as being a response to unconscious cues or implicitly apprehended prior learning.
– Dr. Jason Gallate & Ms Shannan Keen BA
Psychological Influences on Personal Probability
Thought Question s
1. Which is a more likely cause of death in the United States, homicide or diabetes?
How did you arrive at your answer?
2. Do you think people are more likely to pay to reduce their risk of an undesirable event from
95% to 90% or to reduce it from 5% to zero?
Personal probabilities: values assigned by individuals based on how likely they think events are
to occur.
Equivalent Probabilities, Different Decisions
Certainty Effect: people more willing to pay to reduce risk from fixed amount down to 0 than to
reduce risk by same amount when not reduced to 0.
Example: Buying a new car. Salesperson explains that you can purchase an optional safety
feature for $200 that will reduce your chances of death in a high speed accident from 50% to
45%. Would you be willing to purchase the device?
Same price but reduces the risk from 5% to zero. Would you be willing to purchase the
device?
Pseudocertainty Effect: people more willing to accept a complete reduction of risk on certain
problems and no reduction on others than to accept a reduced risk on a variety (all) problems.
Psychological Influences on Personal Probability
How Personal Probabilities Can Be Distorted
Representativeness heuristic leads people to assign higher probabilities than warranted to
scenarios that are representative of how we imagine things would happen.
This leads to what is called the conjunction fallacy … when detailed scenarios involving the
conjunction of events are given higher probability assessments than statements of one of the
simple events alone.
Rule 4: The probability of two events occurring together, in conjunction, cannot be higher than
the probability of either event occurring alone.
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
antinuclear demonstrations.
Respondents asked which of two statements was more probable:
1. Linda is a bank teller.
2. Linda is a bank teller who is active in the feminist movement.
Frequency Format versus Probability form
Now let us change the question slightly without changing the description of Linda:
Imagine women who fit the description of Linda
How many of these women are bank tellers?
How many of these women are bank tellers and active in the feminist movement?
Psychological Influences on Personal Probability
Anchoring and adjustment heuristic
Anchoring and adjustment is a psychological heuristic that influences the way people intuitively
assess probabilities. According to this heuristic, people start with an implicitly suggested reference
point (the "anchor") and make adjustments to it to reach their estimate. A person begins with a
first approximation (anchor) and then makes adjustments to that number based on additional
information.
The anchoring and adjustment heuristic was first theorized by Tversky and Kahneman. In one of
their first studies, the two showed that when asked to guess the percentage of African nations
which are members of the United Nations, people who were first asked "Was it more or less than
10%?" guessed lower values (25% on average) than those who had been asked if it was more or
less than 65% (45% on average). The pattern has held in other experiments for a wide variety of
different subjects of estimation. Others have suggested that anchoring and adjustment affects
other kinds of estimates, like perceptions of fair prices and good deals.
Some experts say that these findings suggest that in a negotiation, participants should begin
from extreme initial positions.
As a second example, an audience is first asked to write the last two digits of their social security
number and consider whether they would pay this number of dollars for items whose value they
did not know, such as wine, chocolate and computer equipment. They were then asked to bid for
these items, with the result that the audience members with higher two-digit numbers would
submit bids that were between 60 percent and 120 percent higher than those with the lower
social security numbers, which had become their anchor.
Psychological Influences on Personal Probability
How Personal Probabilities Can Be Distorted
The focusing effect (or focusing illusion) is a cognitive bias that occurs when people place too
much importance on one aspect of an event, causing an error in accurately predicting the utility
of a future outcome.
People focus on notable differences, excluding those that are less conspicuous, when making
predictions about happiness or convenience.
Example: When people were asked how much happier they believe Californians are compared to
Midwesterners, Californians and Midwesterners both said Californians must be considerably
happier, when, in fact, there was no difference between the actual happiness rating of
Californians and Midwesterners.
The bias lies in that most people asked focused on and overweighed the sunny weather and
ostensible easy-going lifestyle of California and devalued and underrated other aspects of life
and determinants of happiness, such as low crime rates and safety from natural disasters like
earthquakes (both of which large parts of California lack).
A rise in income has only a small and transient effect on happiness and well-being, but people
consistently overestimate this effect. Kahneman proposed that this is a result of a focusing
illusion, with people focusing on conventional measures of achievement rather than on everyday
routine.
Psychological Influences on Personal Probability
How Personal Probabilities Can Be Distorted
The Availability Heuristic
Tversky and Kahneman note that “there are situations in which people assess the . . .
probability of an event by the ease with which instances or occurrences can be brought to
mind. . . . This judgmental heuristic is called availability.”
1. Which do you think caused more deaths in the United States in 2000, homicide or
diabetes?
Most answer homicide. The actual death rates were 6.0 per 100,000 for homicide compared
with 24.6 per 100,000 for diabetes (National Center for Health Statistics).
Distorted view that homicide is more probable results from the fact that homicide receives
more attention in the media.
2. Imagine the following scenarios and estimate their odds:
a. A massive flood somewhere in America in which more than a thousand people die.
b. An earthquake in California, causing massive flooding, in which more than a thousand
people die.
3. The death of a relative in a motorcycle accident is far more likely to influence your attitude
than any statistics on motorcycle accidents
Psychological Influences on Personal Probability
IAT: "The Problem is Really in the Environment"
Malcolm Gladwell, author of "Blink", & Dr. Anthony Greenwald, psychologist at the University of
Washington, discuss the race-based Implicit Association Test and why some people show an
unconscious bias in favor of White people over Black people. – Link
Implicit Association Test
It is well known that people don't always 'speak their minds', and it is suspected that people
don't always 'know their minds'. Understanding such divergences is important to scientific
psychology.
This web site presents a method that demonstrates the conscious-unconscious divergences
much more convincingly than has been possible with previous methods. This new method is
called the Implicit Association Test, or IAT for short.
Race ('Black - White' IAT). This IAT requires the ability to distinguish faces of European and
African origin. It indicates that most Americans have an automatic preference for white over
black. – Link
Psychological Influences on Personal Probability
Optimism, Reluctance to Change, and Overconfidence
Optimism
Slovic and colleagues (1982, pp. 469–470) note that “the great majority of individuals
believe themselves to be better than average drivers, more likely to live past 80, less likely
than average to be harmed by the products they use, and so on.”
Example: Optimistic College Students
On the average, students rated themselves as 15 percent more likely than others to
experience positive events and 20 percent less likely to experience negative events.
Reluctance to Change
The reluctance to change one’s personal-probability assessment or belief based on new evidence.
Example: Reluctance of the scientific community to accept new paradigms or to examine
compelling evidence for phenomena such as extrasensory perception.
“There seems to be a strong need on the part of conventional science to exclude such phenomena
from consideration as legitimate observation. Kuhn and Feyerabend shoed that it is always the case
with “normal” or conventional science that observations not confirming the current belief system
are ignored or dismissed . The colleagues of Gallileo who refused to look through his telescope
because they “knew” what the moon looked like are an example”. – Hayward (1984)
Overconfidence
Psychological Influences on Personal Probability
The tendency for people to place too much confidence in their own assessments.
When people venture a guess about something for which they are uncertain, they tend to
overestimate the probability that they are correct.
Example – Excerpt from “The Black Swan – The Impact of the Highly Improbable”
Take a room full of people. Randomly pick a number. The number could correspond to anything:
The sales of a particular book during the months with r in them, the average IQ of Columbia
students, the population of Rajastan.
Ask each person in the room to independently estimate a range of possible values for that
Number in such a way that they believe that they have a 98 percent chance of being right, and
less than 2 percent chance of being wrong. In other words, whatever they are guessing has
about a 2 percent chance to fall outside their range. For example:
"I am 98 percent confident that the population of Rajastan is between 15 and 23 million.“
"I am 98 percent confident that the sales of “Blink” during the months with r in them will be
between 25,000 and 80,000 copies “
You would expect roughly 2 out of every 100 participants to be wrong.
Results: The 2% error rate turned out to be close to the 45% in the population being tested.
Who do you think were the population being tested?
Psychological Influences on Personal Probability
Calibrating Personal Probabilities of Experts
Professionals who help others make decisions (doctors, meteorologists) often use personal
probabilities themselves.
Using Relative Frequency to Check Personal Probabilities
For a perfectly calibrated weather forecaster, of the many times they gave a 30% chance of rain, it
would rain 30% of the time. Of the many times they gave a 90% chance of rain, it would rain 90%
of the time, etc.
Can assess whether probabilities are well-calibrated only if we have enough repetitions of
the event to apply the relative-frequency definition.
Calibrating Weather Forecasters and Physicians
Open circles: actual relative frequencies of rain vs. forecast probabilities.
Dark circles relative frequency patient actually had pneumonia vs. physician’s personal
probability they had it.
Weather forecasters were
quite accurate, well calibrated.
Physicians tend to overestimate
the probability of disease, especially
when the baseline risk is low.
When physician quotes a probability,
ask “personal or based on data?”
Psychological Influences on Personal Probability