Thinking and Decision Making

Psychology 2235Prof. Elke Weber

Segment 2 Descriptive Models

Descriptive Models of Choice

I. Decision Making as Constrained OptimizationA. Existences and Role of Constraints in Optimization Problems

B. Implementation of Decision Processes as a Constraint

II. We, the Decision MakersA. Homo Sapiens as a Constraint and Opportunity

III. How do we utilize our strengths and cope with our limitations?A. Simple judgment tasks (e.g., frequency or likelihood judgments)

B. Complex judgment tasks (e.g., impression formation)

C. Riskless choice tasks (e.g., what car to buy)

D. Risky choice tasks (e.g., whether to get life insurance)

Role of Constraints in Optimization

• Operations Research: Decision Making = Objective Function (to be optimized) + Constraints

• Power of Concept of Optimization- guiding principle that provides predictions and solutions

in economics (maximization of expected utility)

and biology (maximization of inclusive fitness)

Example 1: Assigning incoming aircrafts to gates

Example 2: How to choose the best three out of 600 applicants for an academic program

We, the Decision Maker: Constraints and Opportunities

• Sensation and Perception • Attention• Memory —————————| needed to produce probable • Imagination/Creativity ———| outcomes and imagine what

they will feel like

• Emotions• Learning• Categorization • Logical Reasoning • Computation —> needed for cost-benefit calculations • Needs/Motivation —> Goals —> Utility

Herb Simon (1983)

Three visions of rational choice

• Olympian Modelheroic (wo)man making comprehensive choices

in an integrated universe

• Behavioral Modelorganisms with limited computational abilities

making adaptive choices in a complex, but mostly ‘empty’

universe

• Intuitive Modelorganisms using recognition processes that capitalize on stored

experiences and using emotions to focus (limited) attention

Satisficing(Herb Simon)

Definition: Choosing the first alternative that is good enough (as opposed to choosing the BEST alternative).

- A sufficiency criterion rather than an optimality one.

Why Satisfice?

- Because the cost in time, effort, and demand on your analytical capabilities may be too high to do otherwise.

Examples:

• Investment

• Job hunting

• Consumer purchases

Two Processing Systems

• Epstein (1994) and Sloman (1996) rational system and emotionally-driven experiential system

different systems use different processes and representations

(and thus are differentially activated by

different types of stimuli and information)

two models of mental representation (Bruner, 1986):

- propositional thought:

logical, formal, abstract

- narrative thought:

imagistic, concrete, specific, emotional