Human Cognitive

Processes: psyc 345

Ch. 13 Reasoning and Decision

Making

Takashi Yamauchi
Takashi Yamauchi (Dept. of Psychology, Texas A&M University)
(Q1) what mental strategy do people often
employ when they make probabilistic
reasoning?

(Q2) what decision strategies do people

commonly use when they make a choice?
What factor influences our choice behavior
above and beyond our own rational
judgments?
 Reasoning
People start with information and come to
conclusions that go beyond that
information.

You are incredibly nice today. Whats going

on?
Even understanding a joke requires some form of
reasoning (or inference)
 Deductive reasoning vs. inductive
reasoning
Deductive reasoning
When the information you have is correct, you
can necessarily reach a conclusion.

Inductive reasoning
You can arrive at conclusions about what is
probably true.
 Deductive reasoning
Obama is the president of the US.
Only natural-born citizens of the US can serve
as a president of the United States.
Conclusion: Obama is a natural-born US
citizen.

Arnold Schwarzenegger is not a natural-born

US citizen.
Conclusion: Arnold S. cannot be a president
of the US.
 Syllogism
Premises and categorical syllogisms

Premise 1: All birds are animals.

Premise 2: All animals eat food.
Conclusion: All birds eat food.
 Premise 1: All people in Texas love the
Spurs.
Conclusion: All Texans hate the Lakers.

Is this true?
Is this valid?
 Premise 1: All Texans love the Spurs.
Premise 2: All people who love the Spurs
hate the Lakers.
Conclusion: All Texans hate the Lakers.

Is this valid?
Is this true?
Logical validity:
A syllogism is valid when its conclusion follows
logically from its premises.
(Q1) what mental strategy do people often
employ when they make probabilistic
reasoning?
 Watson four-card problem

There is a letter on one side of each card and a number

on the other side.
Indicate the minimum number of cards you need to turn
over to test the following rule:
If there is a vowel on one side, then there is an even
number on the other side.
 Real-life concrete information helps your
reasoning
Each card has an age on one side and the name of a
beverage on the other side.
Indicate the minimum number of cards you need to turn
over to test the following rule:
If a person is drinking beer, then he or she must be over
19 years old.
Fig. 12-8, p. 447
 Answer
The answers for the letter-number problem
and the beer-age problem are identical.

You have to turn E and 7

Only 7 % of the participants were correct.

You have to turn beer and 16 years old.

73 % of the participants were correct.

Why is there such a big difference in the two problems?
People use a real-life schema to solve a reasoning
problems.
 Inductive Reasoning
Conclusions do not definitely follow from
premises.
Conclusions are only probably true.
E.g.,

(premise) Many people in Texas love football.

(conclusion) Many people in Oklahoma like
football.
 Inductive reasoning
Examples:
Will the stock market go up or down next year ?
Which movie will win the Oscar?
Does she say yes if I ask her to go out?
How likely am I accepted to a medical school?
How much money can I make if I choose carrier
A?
Is this plan likely to succeed?
Is this guy a good fit for this job?
 Inductive reasoning
People draw a conclusion based on
observations.

But when do they feel more / less certain

about our conclusion?

What are the better ways to persuade

others?
(Q1) what mental strategy do people often
employ when they make probabilistic
reasoning?

By and large, people tend to use quick and

easy heuristics.

Availability, representativeness,
 Demo 1:
Which is more prevalent, words that begin
with the letter r, or words in which r is the
third letter?
 Demo 2:
For each pair of cases, which cause of death you
consider more likely for people in the US?

Homicide Appendicitis
Auto-train collision Drowning
Measles Smallpox
Botulism Asthma
Asthma Tornado
Appendicitis Pregnancy
 Availability heuristics
Demo 1: Which is more prevalent, words that
begin with the letter r, or words in which r is the
third letter?

About 70% of the respondents tend to respond

that there are more words with r in the first
position than in the third position.

(In reality, there are three times more words that

have r in the 3rd position).
The bars in the graph
indicate the number of
people who judged the
least likely alternative in
each pair as causing
the most deaths.

Pairs of causes of
death are listed below
the graph, with the
least likely cause on
the left. The number in
parentheses on the
right indicates how
many more times more
people were actually
killed by the cause on
the right.
 Availability Heuristics
We use our memory of actual instances
for our judgment. So, when we make a
judgment, things that are available in our
mind determine our judgment.
E.g.,
Think of words that begin with r.
Think of words that have r in the third
position?
Which is easier to think of?
 90% of success is just showing up.
Woody Allen
http://blog.bplans.com/2008/02/22/90-of-success-
is-just-showing-up/
http://en.wikiquote.org/wiki/Woody_Allen
 Murder rate
Finland vs. Dominica vs. Italy

The murder rate of Finland is twice higher than that

of Italy.
The murder rates of Finland and Dominica are
about the same.

http://www.nationmaster.com/graph/cri_mur_perca
p-crime-murders-per-capita
 Crime rate
El Paso vs. Colorado Springs vs. Denver
vs. Boston
El Paso (4.57 / 1000)
Colorado Spring (4.9 / 1000)
Denver (5.78 / 1000)
Boston (9.92 / 1000)

http://en.wikipedia.org/wiki/United_States_citie
s_by_crime_rate
 Representative heuristics
We tend to make judgments based on
resemblance.

The probability that an event A comes from

class B is determined by how well A
resembles the properties of class B.

Is A likely to be B?
we say yes, to the extent that A resembles
B.
 Representative heuristics
Demo 1
We randomly pick one male from the
population of the US. That male, Robert,
wears glasses, speak quietly, and reads a
lot. Is it more likely that Robert is a
librarian or a farmer?
 Representative heuristics
The description of Robert as wearing
glasses, speaking quietly, and reading a
lot matched peoples image of a typical
librarian.

people make a judgment based on how

closely Robert resembles a typical
librarian or a farmer.
 Demo 2:
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. Which of the
following alternatives is more probable?

1. Linda is a bank teller.

2. Linda is a bank teller and is active in the
feminist movement.
 Many people choose 2, but 2 cannot be
more likely than 1. Why?
People used
representative
heuristics, and
they are
incorrectly
assuming that
the description
of Linda fits an
image of
feminists.
 (Q2) what decision strategies do people
commonly use when they make a choice?
What factor influences our choice behavior
above and beyond our own rational
judgments?
Decision making and choosing
among alternatives
 The utility approach to decisions

Basic idea:
People make decisions in order to maximize
the utility associated with the choice.
 buying a car
Honda Accord vs. Mercury Cougar
You have $20,000 to spend.
 Honda Accord

Mercury Cougar
Compare the features of the two
cars
Accord is slightly more expensive than Cougar.
Cougar has better horse power than Accord.
Accord has better fuel economy.
Cougar is more stylish than Accord.
Expected utility theory
you choose the one that gives you the maximum
value (the maximum satisfaction you get).
Sum(U(A))> Sum(U(B)) --> select A
what is valuable is subjective.
 Expected utility theory

mental arithmetic

Choose Honda Accord if

Sum(Accord) > Sum(Cougar)

willingness Selling / Buying a car
to buy / sell

seller

buyer

$price
Probability to say
Yes, go for it!!
Dating scene
girl

boy

$ cost
Square one
McDonald

Mr. Gs

Christophers
Caf Excel
KFC
 Basic assumption in Economics
Peoples choice behavior is driven to
maximize their self-interest.

Rational analysis
Milton Friedman (2:24)
http://www.youtube.com/watch?v=RWsx1X8PV_A
But you see many irrational behaviors.
Dot-com bubble, housing bubble
Why do we make so many irrational
decisions?
 People may be rational, but their decision is
very much influenced by many psychological
factors (such as emotion, attention, and
memory)
Behavioral economics
Behavioral economics examines peoples
economic choice behavior from a vantage point of
cognitive psychology.
Behavioral economics. 4:16
http://www.youtube.com/watch?v=Fa-mIosWOK8
Interview: NPR Behavioral economics (9:00)
Amos Tversky (1937 1996) Daniel Kahneman (1934 )
 Problems with the utility approach
People are not good at predicting their
emotional utility.

Predicting the utility (how much satisfaction

you would get) of one choice over the other
isnt that easy.

Many psychological factors influence your

perception of utility
 Focusing illusion
People focus on one aspect of a situation and
ignore other aspects.

1. How happy are you?

2. How many dates did you have last
month?
Correlation = 0.12

1. How many dates did you have last

month?
2. How happy are you?
Correlation = 0. 66
 Your decisions depend on how
choices are presented

Demo

Coglab
Risky decisions
 Imagine that the US is preparing for the
outbreak of an unusual Asian disease that is
expected to kill 600 people. Two alternatives
programs to combat the disease have been
proposed. Assume that the exact scientific
estimates of the consequences of the programs
are as follows.

If Program A is adopted, 200 people will be saved.

If Program B is adopted, there is a 1 / 3 probability

that 600 people will be saved, and a 2 / 3 probability
that no people will be saved.

Which program would you choose?

 Imagine that the US is preparing for the
outbreak of an unusual Asian disease that is
expected to kill 600 people. Two alternatives
programs to combat the disease have been
proposed. Assume that the exact scientific
estimates of the consequences of the programs
are as follows.

If Program C is adopted, 400 people will die.

If Program D is adopted, there is a 1 / 3 probability

that nobody will die, and a 2 / 3 probability that 600
people will die.

Which program would you choose?

Fig. 12-15, p. 470
 Risk-aversion strategy
The idea of saving 200 lives with certainty is
more attractive than the risk that no one will
be saved.

Risk-taking strategy
The idea of losing 400 lives with certainty is
less attractive than the risk that a 2 in 3
chance that 600 people will die.
 When a problem is framed in terms of
gain, we tend to choose sure things (risk-
aversion strategy).

When a problem is framed in terms of

loss, we tend to choose risky things (risk-
taking strategy)
 If you are lucky, you have a chance to win
$1000. Which game do you choose?
Game A. asuregainof$240
Game B. 25%chancetogain$1000and75%
chancetogainnothing

Game A 84%
Game B 16%
 You are given $1000, provided that you
will play either one of the following games.
Which game do you choose?

Game C. asurelossof$750
Game D. 75%chancetolose$1000and25%
chancetolosenothing.

Game C. 13%
Game D. 87%
 Imagine that the US is preparing for the
outbreak of an unusual Asian disease that is
expected to kill 600 people. Two alternatives
programs to combat the disease have been
proposed. Assume that the exact scientific
estimates of the consequences of the programs
are as follows.

If Program A is adopted, 200 people will be saved.

If Program B is adopted, there is a 1 / 3 probability

that 600 people will be saved, and a 2 / 3 probability
that no people will be saved.
 an unusual Asian disease that is expected to kill
600 people.
Program A 200 people will be saved
Program B 1 / 3 probability 600 saved
And 2 / 3 probability no people will be saved.
400 die

200 saved

400 die
 an unusual Asian disease that is expected to kill
600 people.
Program C 400 people will die.
Program D 1 / 3 probability nobody will die,
and 2 / 3 probability 600 people will die.

200 saved 400 die

200 saved
 400 die

200 saved

400 die

200 saved 400 die

200 saved
 If you are lucky, you have a chance to win
$1000. Which game do you choose?
Game A. asuregainof$240
ExpectedUtility=$240

Game B. 25%chancetogain$1000and75%
chancetogainnothing
ExpectedUtility=$1000*0.25+$0*0.75=$250

Game A 84%
Game B 16%
 You are given $1000, provided that you will play
either one of the following games. Which game
do you choose?
Game C. asurelossof$750
ExpectedUtility=$1000$750=$250

Game D. 75%chancetolose$1000and25%chanceto
losenothing.
ExpectedUtility=$1000$1000*0.75$0*0.25=$250

Game C. 13%
Game D. 87%