The Psychology of Judgment and Decision Making

1. The Psychology of Judgment and Decision Making Scott Plous Wesleyan University, 1993

2. Overview • Compendium that aggregates decades of research on judgment and decision making • Primarily from Psychology, but pulls in a few other fields • Our approach today: • Complete the Reader survey as a class • Walk through each chapter • Describe the concepts • Discuss examples from reader survey • Discuss application to MIS research

3. Section I Perception, Memory, and Context

4. Ch1: Selective Perception • There is no such thing as immaculate perception. What you see depends upon what you thought before you looked.-Myron Tribus • There is no such thing as context-free decision making. All judgments and decisions rest on the way we see and interpret the world.-Scott Plous

5. Ch2: Cognitive Dissonance • We are motivated to reduce or avoid psychological inconsistencies • Self-perception theory • Dissonance has more to do with how people infer their beliefs from watching themselves behave • The brain wants the world to make sense and will create explanations such that it does • i.e. if I perform a task for a small amount of money, I must derive enjoyment from the task, but if I was highly compensated, I was motivated by the money. • Can be pre-decisional or post-decisional

6. Ch2: Cognitive Dissonance Relevance to MIS • System design • User behavior • Deception detection • Induces physiological changes

7. Ch3: Memory and Hindsight Biases • What is memory? • Not copies of experiences on deposit in a data bank • Reconstructive, dependent upon contextual factors • Hindsight bias • Tendency to view what has already happened as inevitable and obvious without recognizing that retrospective knowledge is influencing one’s judgment • Strategies to avoid • Stop to consider reasons why the results may have turned out differently

8. Ch3: Memory and Hindsight Biases – survey examples • Memory is reconstructive and highly dependent upon contextual factors: • (34a) "The ants ate the jelly which was on the table." • Did this sentence appeared before or not? Confidence rating: ___ • (34b) "The ants in the kitchen ate the sweet jelly which was on the table." • Did this sentence appeared before or not? Confidence rating: ___ • (34c) "The ants ate the sweet jelly." • Did this sentence appeared before or not? Confidence rating: ___

9. Ch3: Memory and Hindsight Biases Relevance to MIS • System design • System adoption • Acceptance of technology

10. Ch4: Context Dependence • Contrast effects • Our perceptions can be different based upon the context in which they occur • Hot, cold, warm water • Primacy effect • Characteristics appearing early influence impressions more than ones appearing later • Envious, stubborn, critical, impulsive, industrious, and intelligent vs. • Intelligent, industrious, impulsive, critical, stubborn, and envious • Recency effect • Able to remember more recent information more readily than older information • Halo effect • Tendency to treat a set of characteristics in a similar manner – all high, all low– even when they should not necessarily be related

11. Ch4: Context Dependence Relevance to MIS • System design • How interfaces are perceived (contrast/halo) • Efficiency – what do you look at first and how does that impact context/decisions • Recency – what does the system expect the user to remember (use/training)

12. Section II How questions affect answers

13. Ch5: Plasticity • Plasticity: Malleability of responses based on situation • Order effects • The order in which questions are asked can influence the perceived context and as a result influence responses • Pseudo-opinions • When people are familiar with an issue, context and order produce marginal changes of opinion • When people have little familiarity, they are more easily influenced • If they know nothing, sometimes they will still offer a “pseudo-opinion” • Can drastically influence political affairs • Inconsistency • Discrepancy between two related attitudes or between an attitude and a corresponding behavior • Can illustrate cognitive dissonance and also that situational factors can introduce complications – abstract attitudes can bear little relation to specific actions

14. Ch5: Plasticity Relevance to MIS • System design • Order effects in UI • Adoption • Pseudo-opinions and inconsistency can impact project success

15. Ch6: The Effects of Question Wording and Framing • It’s not what you ask • It’s how you ask

16. Ch6: The Effects of Question Wording and Framing (cont.) • Word choice, safe vs. safer • Forced choice (e.g., faster vs. slower) vs. middle category(e.g., faster vs. same as now vs. slower) • Open (fill in the blank) vs. closed (a, b, c, and or d, etc.) • Norbert Schwarz et al. noted “Response scales are not simply ‘measurement devices’ that respondents use to report their behaviors. Rather . . . respondents may use the range of behaviors[emphasis added] described in the response alternatives as a frame of reference in estimating and evaluating their own behavior [emphasis added]” (as cited in Plous 1993, p. 67).

17. Ch6: The Effects of Question Wording and Framing (cont.) • Social desirability – some answers may be more socially desirable than others • Allowing vs. forbidding • Types of speech • Peep shows, X-rated movies • “Framing” • Tversky and Kahneman stated a decision frame [emphasis added] is “the decision maker's conception of the acts, outcomes, and contingencies associated with a particular choice” (as cited in Plous 1993, p. 69). • Very, very important in information security, gain security or lose freedom

18. Ch6: The Effects of Question Wording and Framing (cont.) • Deductive logic • “Extra” taxes for childless families, not tax deductions for families with children • Psychological accounting • Psychological accounting requires some notion of reference points/accounts. • We just saw an MIS Speaker Series on Mental Accounting (without reference). • Before relying on results from survey research [emphasis added] and other studies of judgment and decision making [emphasis added], it is important to consider how people's answers would have changed as a function of factors such as:

19. Ch6: The Effects of Question Wording and Framing (cont.) • The order in which the questions were presented • The context in which the questions appeared • Whether the question format was open or closed • Whether the questions were filtered • Whether the questions contained catch phrases • The range of suggested response alternatives • The order in which response alternatives were presented • Whether middle categories were provided • Whether problems were framed in terms of gains or losses * More to come

20. Ch6: The Effects of Question Wording and Framing Relevance to MIS • Measures • Survey or not, you have to ask questions • System design • UI Question wording and framing

21. Section IV Heuristics and Biases

22. Ch10: The Representativeness Heuristic • The Law of Small Numbers • The Hot Hand • Neglecting Base Rates • Nonregressive Prediction • Clinical Versus Actuarial Prediction

23. Ch10: The Representativeness Heuristic Relevance to MIS • System design • What information do we present? • How to mitigate heuristic based bias with UI design • Decision making • Understanding decision-making heuristics key to interpreting user behavior • Summarization and dashboarding • Are we providing the correct context (base rates, etc.)

24. Ch11: The Availability Heuristic • Availability Goes A Wry • The Limits of Imagination • Denial • Nuclear war • Vividness • The Legal Significance of Guacamole • A Disclaimer

25. Ch11: The Availability Heuristic Relevance to MIS • System design • What comparisons are people making when they interact with the system? • Experiments and Measures

26. Ch12: Probability and Risk • Confusion of The Inverse • It'll Never Happen To Me • Compound Events • Conservatism • The Perception of Risk • Do Accidents Make Us Safer? • Recommendations

27. Ch12: Probability and Risk Relevance to MIS • IT deployment and valuation • User actions • Experiments and Measures

28. Ch13: Anchoring and Adjustment • Thinking About The Unthinkable • How Real is Real Estate? • Further Examples of Anchoring

29. Ch13: Anchoring and Adjustment Relevance to MIS • System design • User interface • What information is presented as anchor? • IT Deployment and economics • Experiments and Measures

30. Ch14: The Perception of Randomness • An Unlikely Development • Luck And Superstition • Recognizing Randomness • Seeing Patterns In Randomness • Can People Behave Randomly? • Learning To Act Randomly

31. Ch14: The Perception of Randomness Relevance to MIS • ADMIT & CAT • People can be trained to behave randomly • UI for data analysis and pattern recognition

32. Ch15: Correlation, Causation, and Control • Does God Answer Prayers? • Illusory Correlation • Invisible Correlations • Getting By • Causalation • Heads I Win, Tails It's Chance • The Kind Of Help That Doesn't Help

33. Ch15: Correlation, Causation, and Control Relevance to MIS • Experiments and Measures • Data analysis • Researcher • User • Prescriptive systems and behavior change • Perception of control

34. Ch16: Attribution Theory • Analysis of Variance Framework • The Person - Consensus • The Entity – Stimulus • The Time – Circumstance • A Lack Of Consensus • Salience • The Fundamental Attribution Error • My Situation Is Your Disposition • there is a pervasive tendency for actors to attribute their actions to situational requirements, whereas observers tend to attribute the same actions to stable personal dispositions. • Trading Places

35. Ch16: Attribution Theory – cont. • Clinical Implications • For observers, the actor is most salient; for the actor, situational demands are salient • Other Attributional Biases • "self-serving" bias • "egocentric" biases • "positivity effect" is a tendency to attribute positive behaviors to dispositional factors and negative behaviors to situational factors • "negativity effect" disliked others the "ultimate attribution error“ • the tendency to ascribe less variability to others than to oneself • Debiasing • Pay Close Attention to Consensus: If most people behave similarly when confronted by the same situation, a dispositional explanation is probably unwarranted. Instead, observers should look to situational factors for an explanation of behavior. • Ask How You Would Have Behaved In The Same Circumstance

36. Ch16: Attribution Theory Relevance to MIS • Experiments and Measures • Data analysis • User behavior and prescriptive systems

37. Section V The Social Side of Judgment and Decision Making

38. Ch17: Social Influences • Social Facilitation • Social Loafing • Scene 1: "Let That Girl Alone!“ • Scene 2: Tunnel Vision • Scene 3: Picking Up The Pieces • Bystander Intervention • Social Comparison Theory • Taking Cues From Those Who Are Similar • Social Analgesia • Conformity • Minority Influence • Groupthink

39. Ch17: Social Influences Relevance to MIS • Individual behavior when a group is present • Motivation • Experiments and Measures • Social desirability • Society and culture

40. Ch18: Group Judgments and Decisions • Group Errors and Biases • Group Polarization • Horse Sense • Are Several Heads Better Than One? • The Benefits Of Dictatorship

41. Ch18: Group Judgments and Decisions Relevance to MIS • Group behavior and interactions • System design • Group Support Systems • Online interaction • Social networking • Experimental design

42. Section VI Common Traps

43. Ch19: Overconfidence • The Case Of Joseph Kidd • Extreme Confidence • When Overconfidence Becomes A Capital Offense • Calibration • The Correlation Between Confidence And Accuracy • How Can Overconfidence Be Reduced? • Stop to consider reasons why your judgment might be wrong.

44. Ch20: Self-Fulfilling Prophecies • Guess Again • Self-Perpetuating Social Beliefs • The Pygmalion Effect • In The Minds Of Men • Self-Fulfilling Racial Stereotypes

45. Ch21: Behavioral Traps • A Taxonomy Of Traps • Time delay traps • Ignorance traps • Investment traps • Deterioration traps • Collective traps • Prisoner's Dilemma • How Much Would You Pay For A Dollar? • Knee Deep In The Big Muddy • The Great Escape

46. Conclusions • Psychological biases are an intrinsic part of the way humans make judgments and decisions • It is important to take these biases into consideration when conducting MIS research • System Design • Experiment Design • Biases impact not just subjects, but researchers themselves