Biases and Illusions when making judgements Flashcards Preview

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Flashcards in Biases and Illusions when making judgements Deck (12)
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1

The illusion of understanding

We like to construct simple narratives based on what has happened even if we don't understand what is going on

we have difficulty considering things that didn't happen but might have, we believe our narratives explain what happened

2

Hindsight bias

Nixons visit to china, will he or won't he meet Mao?
probabilities of 15 events estimated before he went to china, people reconstructed their predictions after he returned, the events that had happened, prob had gone up, events had not happened, prob went down

3

Outcome bias

Events and the choices that led to them happening are judged by their actual outcomes, not by whether the decisions were good ones when they were made

4

The illusion of validity

Kahneman assessed officer potential of recruits by observing them in a leaderless group challenge, their judgements were confident but they were useless, as shown on feedback about how they performed

however, their feedback didn't affect confidence in judgements they made later on

confidence reflect ease of making a judgement

5

The illusion of skill

Some experts are not actually experts

analysis of stock traders by brokers, on average the bought stock did worse than the sold stock by 3.2%, brokers who made least trades tended to do better because they don't know much

6

Skill and prediction

Landmark study of clinical vs statistical prediction
simple statistical prediction does better than clinical in 60% of cases and it does as well in the other 40%

predicted prices of fine Bordeaux on the basis of three measures of weather in the vintage year - did much better

7

Prediction using multiple regression

The robust beauty of improper linear models in decision making - statistical prediction words well just be looking at the predictors - if they are equally weighted

8

The Apgar test for worrying poor breathing in new borns

Had to score each criteria, predicting if they have poor breathing. The 5 components are equally weighted

9

The limits of intuition

Confidence is not a guide to it's validity - most people think they have a good intuition

10

What are the two crucial conditions needed to improve judgements?

Regular environments (making judgements on the regular and getting feedback)
practise in those environments

medical professionals don't do well as they get no feedback
weather forecasts- they get feedback, so realise what was wrong

11

Inside and outside views

Kahneman was involved in a government project to develop a curriculum and textbook for judgement and decision making, after planning, team judged project to take 1.5-2 years to finish. A member of the team with admin experience reported that 40% similar projects were abandoned and the others took 7-10 years to complete

the project took 8 years - experts were wrong, overview was correct

scottish parliament building - forecast to cost 40m, eventually cost over 400m

12

Optimistic bias

We tend to have a bias to being optimistic, which is not justified by the facts and leads to:
planning fallacy
belief in a benign world
belief in the ability to forecast future

however, optimistic tend to do better in life, more influential and to be healthier