Rational Choice in an Uncertain World: The Psychology of Judgement and Decision Making
Reid Hastie
Top 10 Best Quotes
“Aristotle urged people to seek “the golden mean” between extremes, “moderation in all things” (which we interpret as including moderation in the pursuit of moderation). But why should this golden mean in general be desirable? Clyde Coombs and George Avrunin (1977) have enunciated a very simple principle that implies moderation: “Good things satiate and bad things escalate.”
“We take the position that research - not anecdotes, not "plausible beliefs", not common sense, and not our everyday experience - should be the basis for understanding and evaluating our decision-making achievements and defeats.”
“Sociologist Barry Glassner (1999) has documented many of the biases introduced by “If it bleeds, it leads” news reporting, and by the strategic efforts of special interest groups to control the agenda of public fear of crime, disease, and other hazards. Is an increase of approximately 700 incidents in 50 states over 7 years an “epidemic” of road rage? Is it conceivable that there is (or ever was) a crisis in children’s day care stemming from predatory satanic cults? In 1994, a research team funded by the U.S. government spent 4 years and $750,000 to reach the conclusion that the myth of satanic conspiracies in day care centers was totally unfounded; not a single verified instance was found (Goodman, Qin, Bottoms, & Shaver, 1994; Nathan & Snedeker, 1995). Are automatic-weapon-toting high school students really the first priority in youth safety? (In 1999, approximately 2,000 school-aged children were identified as murder victims; only 26 of those died in school settings, 14 of them in one tragic incident at Columbine High School in Littleton, Colorado.) The anthropologist Mary Douglas (Douglas & Wildavsky, 1982) pointed out that every culture has a store of exaggerated horrors, many of them promoted by special interest factions or to defend cultural ideologies. For example, impure water had been a hazard in 14th-century Europe, but only after Jews were accused of poisoning wells did the citizenry become preoccupied with it as a major problem. But the original news reports are not always ill-motivated. We all tend to code and mention characteristics that are unusual (that occur infrequently). [...] The result is that the frequencies of these distinctive characteristics, among the class of people considered, tend to be overestimated.”
“Results of a recent survey of 74 chief executive officers indicate that there may be a link between childhood pet ownership and future career success. Fully 94% of the CEOs, all of them employed within Fortune 500 companies, had possessed a dog, a cat, or both, as youngsters. The respondents asserted that pet ownership had helped them to develop many of the positive character traits that make them good managers today, including responsibility, empathy, respect for other living beings, generosity, and good communication skills. For all we know, more than 94% of children raised in the backgrounds from which chief executives come had pets, in which case the direction of dependency would be negative. Maybe executive success is really related to tooth brushing during childhood. Probably all chief executives brushed their teeth, at least occasionally, and we might imagine the self-discipline thus acquired led to their business success. That seems more reasonable than the speculation that “communication skills” gained through interacting with a childhood pet promote better relationships with other executives and employees.”
“Perhaps the fundamental precept of probabilistic analysis is the exhortation to take a bird’s-eye, distributional view of the situation under analysis (e.g., a dice game, the traffic in Boulder, crimes in Pittsburgh, the situation with that troublesome knee) and to define a sample space of all the possible events and their logical, set membership interrelations. This step is exactly where rational analysis and judgments based on availability, similarity, and scenario construction diverge: When we judge intuitively, the mind is drawn to a limited, systematically skewed subset of the possible events. In the case of scenario construction, for example, we are often caught in our detailed scenario—focused on just one preposterously specific outcome path.”
“Imagine a life without uncertainty. Hope, according to Aeschylus, comes from the lack of certainty of fate; perhaps hope is inherently blind. Imagine how dull life would be if variables assessed for admission to a professional school, graduate program, or executive training program really did predict with great accuracy who would succeed and who would fail. Life would be intolerable—no hope, no challenge. Thus, we have a paradox. While we all strive to reduce the uncertainties of our existence and of the environment, ultimate success—that is, a total elimination of uncertainty—would be horrific. Knowing pleasant outcomes with certainty would also detract from life’s joy. An essential part of knowledge is to shrink the domain of the unpredictable. But while we pursue this goal, its ultimate attainment would not be at all desirable.”
“Experts have been revered—and well paid—for years for their “It is my opinion that ... ” judgments. As James March has stated, however, such reverence may serve a purely social function. People and organizations have to make decisions, often between alternatives that are almost equally good or bad. What better way to justify such decisions than to consult an expert, and the more money he or she charges, the better. “We paid for the best possible medical advice,” can be a palliative for a fatal operation (or a losing legal defense), just as throwing the I Ching can relieve someone from regretting a bad marriage or a bad career choice. An expert who constructs a linear model is not as impressive as one who gives advice in a “burst” of intuition derived from “years of experience.” (One highly paid business expert we know constructs linear models in secret.) So we value the global judgment of experts independently of its validity. But there is also a situational reason for doubting the inferiority of global, intuitive judgment. It has to do with the biased availability of feedback. When we construct a linear model in a prediction situation, we know exactly how poorly it predicts. In contrast, our feedback about our own intuitive judgments is flawed. Not only do we selectively remember our successes, we often have no knowledge of our failures—and any knowledge we do have may serve to “explain” them (away). Who knows what happens to rejected graduate school applicants? Professors have access only to accepted ones, and if the professors are doing a good job, the accepted ones will likewise do well—reinforcing the impression of the professors’ good judgment. What happens to people misdiagnosed as “psychotic”? If they are lucky, they will disappear from the sight of the authorities diagnosing them; if not, they are likely to be placed in an environment where they may soon become psychotic. Finally, therapy patients who commit suicide were too sick to begin with—as is easily supported by an ex post perusal of their files.”
“Cicero believed “luck” determined the success of gambling with essentially random devices. He also apparently understood that there was a relationship between the luck (odds) on a particular throw or set of throws and long-term frequencies. But Cicero was later executed, illustrating that rationality does not guarantee success; it only increases its likelihood. In fact, as pointed out earlier, opting for rationality when others do not can lead to social ostracism.”
“But what if current misery hindsightfully selects and reconstructs memories of childhood to be consistent with a miserable state today? Peter Lewinsohn and Michael Rosenbaum (1987) set out to answer this question with a rare prospective study of over a thousand citizen volunteers. [...] The results were consistent with the hypothesis that recollection of one’s parents as rejecting and unloving is strongly influenced by current moods; negative recollections were not a stable characteristic of depression-prone people. [...] This study of depression is important in that it casts doubt on the degree to which adult problems are caused by childhood ones. Given a biasing effect of mood on memory, people who are distressed as adults tend to remember distressing incidents in their childhood. And, if a person also believes that current problems have their roots in early life (perhaps because their therapist told them so), this view itself may serve as an organizing principle to produce even greater distortion of recall (remember the Conway & Ross [1984] study).”
“As Richard Nisbett and Lee Ross (1980) point out, rationally defensible deductive logic involves a specification from the universal to the particular (“All men are mortal, therefore Robyn Dawes is mortal.”), but much less reliable inductive logic involves generalization from the particular to the universal (“This one Jewish merchant is dishonest, therefore all Jewish merchants are dishonest.”). However, we are prone to do the exact opposite: we under-deduce and over-induce.”
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Book Keywords:
journalism, causality, golden-mean, life-meaning, social-ostracism, social-psychology, probability, rational-thinking, rationality, statistics, false-memories, cognitive-distortions, good-things, psychology, deductive-reasoning, news, inductive-reasoning, unpredictability, irrationality, ideologies, judgement, cognitive-biases, big-picture, fallacies, experts, uncertainty, decision-making, pop-psychology, rationalization, bad-things, depression, probabilistic-analysis, biases, certainty, luck, groupthink, intuition
