behavioral decision making: biases, heuristics and errors.

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SESSION 4 Memory: Decision Making with a Tiny Whiteboard and a Low-Fidelity Hard Drive. Readings [R, 6] Chapter 3 and sections of Chapter 4 from Plous, S. (1993). The psychology of judgment and decision making. Philadelphia: Temple University Press. [R, 6] Rational choice in an uncertain world: the psychology of judgment and decision making (2nd ed.). Thousand Oaks, Calif.: Sage Publications. [R, 8] Tversky, A. and Kahneman D. (1982). Availability: A heuristic for judging frequency and probability. In D. Kahneman, P. Slovic and A. Tversky (Eds.), Judgment under uncertainty: heuristics and biases (pp. 163-178). Cambridge ; New York: Cambridge University Press. [Q, 1] [Q, 1] Public Broadcasting Service. (2010). The public demands it (Webpage excerpt) Sunstein, C. R. (2003, May 10). Fear Factor: Truth Is, Sunbathing is Probably More Dangerous Than Terrorism, Commentray, Los Angeles Times, p. B11. [R, 4] Kahneman, D., Fredrickson, B. L., Schreiber, C. A., & Redelmeier, D. A. (1993). When more pain is preferred to less: Adding a better end. Psychological Science, 4(6), 401-405. [E, 17] Schacter, D. L. (1999). The seven sins of memory. Insights from psychology and cognitive neuroscience. American Psychologist, 54(3), 182-203. Questions to Consider • What are some practical implications of Primacy, Recency, Hindsight, and Halo effects in the workplace and in business practices • In what real-world contexts might Availability be of particular concern What steps could - SESSION 5 Confidence: How Good (We Think) We Are! Readings [R, 7] Chapter 19 Overconfidence in Plous, S. (1993). The psychology of judgment and decision making. Philadelphia: Temple University Press. [R, 8] Lovallo, D. and Kahneman D. (2003). Delusions of success. Harvard Business Review, 81(7), 56-63. [R, 10] Russo, J. E. and Schoemaker P. J. H. (1992). Managing overconfidence. Sloan Management Review, 33(2), 7. [X, 11] Cooper, A. C., Woo C. Y., et al. (1988). Entrepreneurs' perceived chances for success. Journal of Business Venturing, 3(2), 97-108. Note: This is study of confidence in 2994 entrepreneurs. Some interesting findings for those interested in seeing entrepreneurship or in reading about additional realworld findings of overconfidence. [X, 12] Koriat, A., Lichtenstein S., et al. (1980). Reasons for confidence. Journal of Experimental Psychology-Human Learning and Memory, 6(2), 107-118. Note: If you are particularly interested in the topic of confidence, this paper delves further into some of the possible sources of overconfidence as well as how evidencebased methods affects levels of confidence. Questions to Consider • Try to bring to mind your typical behaviors in situations (professional or personal) in which you offer your opinion, or make predictions decisions. Think through some of these situations in your mind: Do you see any signs of over- or under-confidence What time/effort do you put into thinking about the strength of information you consider What about the weight (importance or credibility) of the information you consider Do you consider strength and weight equally • What relationships can you identify between Overconfidence and other biases and heuristics we have discussed so far in the course Can you identify any interactions between the various biases that might make it even more difficult to calibrate your confidence • Either thinking about yourself or people with whom you work, what plausible management practices could you change or develop to try to avoid overconfidence 6 |
SESSION 6 Readings [Q, 1] Finance and Economics: Carrots dressed as sticks; Designing rewards. (2010). The Economist, 394(8665), 72. [Q, 2] Goode, E. (2001, January 9). In Weird Math of Choices, 6 Choices Can Beat 600, [Q, 2] The New York Times. Johnson, E. J., & Goldstein, D. G. (2003). Medicine - Do defaults save lives Science, 302(5649), 1338-1339. [R, 10] Chapter 4 Framing and Reversal in Bazerman, M. H., & Moore, D. (2009). Judgment in managerial decision making (7th ed.). Hoboken, NJ: J. Wiley & Sons. [R, 16] Chapter 2 in Belsky, G., & Gilovich, T. (2010). Why smart people make big money mistakes...and how to correct them: Lessons from the life-changing science of behavioral economics (Simon & Schuster ed.). New York: Simon & Schuster Paperbacks [X, 12] Chapter 5 Dropping Anchor in Belsky, G., & Gilovich, T. (2010). Why smart people make big money mistakes...and how to correct them: Lessons from the life-changing science of behavioral economics (Simon & Schuster ed.). New York: Simon & Schuster Paperbacks Questions to Consider • What relationship do you see (if any) between the Anchoring and Adjustment heuristic and other heuristics and biases we have covered so far in the course • How are Framing Effects and the Anchoring and Adjustment heuristic consistent with Prospect Theory • In what ways can you see (have you seen) Framing being used beneficially on the job in your area of work What about negative effects SESSION 7 The 13 th Floor: Causes, Effects and Associations between (un)Related Events. Readings [Q, 4] Belkin, L. (2002, August 11). The Odds of That, New York Times. [R, 6] Chapter 15 Correlation, Causation and Control in Plous, S. (1993). The psychology of judgment and decision making. Philadelphia: Temple University Press. [R, 7] Chapter 16 Attribution Theory in Plous, S. (1993). The psychology of judgment and decision making. Philadelphia: Temple University Press. [E, 13] Chapter Conclusion in Fung, K. (2010). Numbers rule your world: The hidden influence of probability and statistics on everything you do. New York: McGraw-Hill. [X, 5] Gmelch, G. (1978). Baseball Magic. Human Nature, 1(8), 32-39. [X, 17] Langer, E. J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32(2), 311-328. Questions to Consider • debias yourself and avoid errors. Two important steps are: (1) forcing yourself to generate and analyze multiple hypotheses (ideas, explanations, proposals) and (2) collecting and considering both confirmatory and disconfirmatory data and facts. If you consider your own "thinking" as "data" (a good idea), what do the readings for this session suggest you should worry about in using this "mental data" as part of your JDM process What are our biases in "thinking" and how can we avoid them 7 |
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