Judgments and Decisions Psych 253

1. Judgments and DecisionsPsych 253 Professor Jon Baron baron@psych.upenn.edu Office: C7 Solomon Office Hours: TBA and by appt Professor Barb Mellers mellers@wharton.upenn.edu Office C1 Solomon Office Hours: Thursdays 1:30 to 3:00 pm and by appt The syllabus is on Jon Baron’s webpage.

2. Teaching Assistants Ann Marie Roepkearoepke@psych.upenn.edu • Office: 3701 Market Street, suite 203 (second floor, Positive Psychology Center) • Office hours: Wed 3:30-5:00 Justin Landy landyj@psych.upenn.edu • Office: C16 Solomon • Office hours: TBA

3. Assignments and Grading Reading, thinking, and class attendance influence your grades on everything else… • 30% Midterm: Oct 5th 2 – 3:30 pm • 30% Homework Assignments and Discussion Paper • 40% Final Exam: Dec 16th 6 – 8 pm

4. Goal • To teach you some principles of good judgment and decision making, to show you where people go astray, to suggest ways to avoid errors and biases, and to explore with you some implications of the theories and findings for real world problems.

5. Normative Decision Making How people shouldmake decisions when they want to be rational, obey the rules of probability and statistics, be logical, and be consistent

6. Descriptive Decision Making How people actually do make decisions within the limits of their cognitive capacities

7. Prescriptive Decision Making The best advice we can provide others who want to make rational decisions given our understanding of actual human decision making.

8. Topics in this Course Multi-attribute Decisions Decision Analysis Probability Hypothesis Testing Value of Information Logic Irrational Belief Persistence Subjective Well-Being Money and Happiness Utility Reference-Dependent Choice Risk Intertemporal Choice Moral thinking Utilitarianism Perceptions of Fairness Negotiations Social Dilemmas Voting Expert Decision Makers Linear Models of Judgment Tools for Debiasing

9. What is a decision? What are the components of a decision? 1. Alternatives (actions, acts, options) 2. States of nature 3. Outcomes (consequences) 4. Utilities (psychological value of outcomes) 5. Goals (rules for deciding how to decide)

10. Types of Decisions Decisions Under Certainty (Riskless Decisions): One state of nature associated with an option (probability = 1) Decisions Under Risk: Multiple states of nature with known probabilities associated with an option Decisions Under Uncertainty: Multiple states of nature with unknown probabilities associated with an option Decisions Under Conflict:Outcomes depend on the choice of an opponent (rather than states of nature)

11. What is it that makes decision making so hard? • What is a good decision? • How would you KNOW if a decision you made was a good decision? • Decisions ≠ Outcomes (Decisions are what we control. Outcomes are what happen.) • Good decisions can have bad outcomes, and good outcomes can arise from bad decisions.

12. In most courses on judgment and decision making, you will learn that: Whether a decision is good or bad depends on how you made it, not what happened.

13. Criteria for Evaluating Decisions Coherence= consistency with principles of logic, probability, and rational principles. Correspondence = accuracy (similarity between predictions and real world) With coherence, the focus is on process. With correspondence, the focus is on outcome.

14. Which cells are most conducive to learning? Process Good Bad Good Outcome Bad

15. Example of a Coherence (Process) Study Students were given pairs of hypothetical marriage partners and judged which of the two potential partners they preferred. Each partner was described in terms of his or her intelligence, looks, and wealth.

16. X is very intelligent, plain looking, and well off. • Y is intelligent, very good looking and poor.

17. Y is intelligent, very good looking and poor. • Z is fairly intelligent, good looking, and rich.

18. Zis fairly intelligent, good looking, and rich. • X is very intelligent, plain looking, and well off.

19. Example of Coherence (Process) Study 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 anti-nuclear demonstrations. Which is more probable? • Linda is a bank teller. • Linda is a bank teller and is active in the feminist movement.

20. Example of a Correspondence (Outcome) Study I will ask you to think about 10 questions. Your goal is not to get the exact answer, but rather to give a high and low estimate such that you are 90% sure that the correct answer falls within that range. You can go as high or low as you like. The challenge is to select a range that is neither too narrow nor too wide. If you succeed, you will have 9 correct answers and 1 error. That means you are correct 90% of the time.

21. 1. Weight of an empty Airbus A240-600 (in kilograms or tons) Low = ________ High = ________ 2.Year that John Steinbeck won the Nobel Prize for literature Low = ________ High = ________ 3. Distance (in kilometers or miles) from the Earth to the Moon Low =________ High =________ 4. Air distance (in kilometers or miles) from Madrid to Baghdad Low =________ High = ________ 5. Year the construction of the Roman Coliseum was completed Low =________ High = ________

22. 6. Year that Magellan's crew completed the first naval circumnavigation of the globe Low =________ High = ________ 7. Height (in meters or feet) of the Aswan High Dam Low = ________ High = ________ 8. Year that Mohandas K. Gandhi was born Low = ________ High = ________ 9. Surface (in square kilometers or miles) of the Mediterranean Sea Low = ________ High = ________ 10. Gestation period of the great blue whale in days Low = ________ High = ________