Tag Archives: Hertwig

Aging and Decisions from Experience

homerThis post is based on the paper: “The role of cognitive abilities in decisions from experience: Age differences emerge as a function of choice set size,” by Renato Frey, Rui Mata,  and Ralph Hertwig that appeared in Cognition 142 (2015) 60–80.

People seldom enjoy access to summarized information about risky options before making
a decision except for things like weather forecasts that explicitly state a probability. Instead, they may search for information and learn from the environment—thus making decisions from experience. Many consequential decisions—including health care choices, finances, and everyday risks (e.g., driving in bad weather; crossing a busy street)—are made without full knowledge of the possible outcomes and their probabilities so we must make decisions from experience. According to the authors, the mind’s most notable transformation across the life span is a substantial decline in processing speed, working memory and short-term memory capacity —all components potentially involved in search and learning processes.

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Harnessing the Inner Crowd

innercrowdUntitledThis post is based on the paper: “Harnessing the Wisdom of the Inner Crowd,” written by Stefan M. Herzog and Ralph Hertwig that appeared in Trends in Cognitive Sciences, October 2014, Vol. 18, No. 10. This is a slightly different take on a subject addressed in the posts:  Dialectical Bootstrapping  and   Bootstrapping.    Herzog and Hertwig seem to be the go to guys on bootstrapping.  In the title they obviously refer to James Surowiecki’s The Wisdom of Crowds. (see post Smart Mobs and Diverse Problem Solvers). They explain that a lone individual can enlist the wisdom of crowds by averaging self-generated, nonredundant estimates. They review evi-
dence for this ‘wisdom of the inner crowd’, and consider how it can be produced, how its accuracy can be improved, and whether people use it to their advantage. Frankly, Figure 1, above puts the advice in one spot.

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Risk Reward Heuristic

riskrewardindexThis post is based on a paper: “Ecologically Rational Choice and the Structure of the Environment”, that appeared in the Journal of Experimental Psychology: 2014, Vol. 143, No. 5. The authors are Timothy J. Pleskac and Ralph Hertwig. The paper is based on the idea that decision making theory has largely ignored the idea that risk and reward are tied together with payoff magnitudes signaling their probabilities.

How people should and do deal  with uncertainty is one of the most vexing problems in theorizing about choice. The researchers suggests a process that is inferential in nature and rests on the notion that probabilities can be approximated from statistical regularities that govern real-world gambles. In the environment there are typically multiple fallible indicators to guide your way. When some cues become unreliable or unavailable, the organism can exploit this redundancy by substituting or alternating between different cues. This is possible because of what Brunswik called the mutual substitutability or vicarious functioning of cues. It is these properties of intercue relationships and substitutability that Pleskac and Hertwig suggest offer a new perspective on how people make decisions under uncertainty. Under uncertainty, cues such as the payoffs associated with different courses of actions may be accessible, whereas other cues—in this case, the probability with which those payoffs occur—are not. This missing probability information has been problematic for choice theories as typically both payoffs and probabilities are used in determining the value of options and in choosing. However, if payoffs and probabilities are interrelated, then this ecological property can permit the decision maker to infer hidden or unknown probability distributions from the payoffs themselves, thus easing the problem of making decisions under uncertainty.

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Emotion and Risky Choice

brainhetwigUntitledThis post is based on the paper: “The Neural Basis of Risky Choice with Affective Outcomes,”  written by Renata S. Suter, Thorsten Pachur, Ralph Hertwig, Tor Endestad, and Guido Biele
that appeared in PLOS ONE journal.pone.0122475  April 1, 2015. The paper is similar to one discussed in the post Affect Gap that included Pachur and Hertwig although that paper did not use fMRI. Suter et al note that both normative and many descriptive theories of decision making under risk have typically investigated choices involving relatively affect-poor, monetary outcomes. This paper compared choice in relatively affect-poor, monetary lottery problems with choice in relatively affect-rich medical decision problems.

The paper is notable in that it not only examined behavioral differences between affect rich and affect poor risky choice, but also watched the brains of the people making the decisions with fMRI. The researchers assert that the traditional notion of a mechanism that assumes sensitivity to outcome and probability information and expectation maximization may not hold when options elicit relatively high levels of affect. Instead, qualitatively different strategies may be used in affect-rich versus affect-poor decisions. This is not much of a leap.

In order to examine the neural underpinnings of cognitive processing in affect-rich and affect poor decisions, the researchers asked participants to make choices between two options with relatively affect-rich outcomes (drugs that cause a side effect with some probability) as well as between two options with relatively affect-poor outcomes (lotteries that incur monetary losses with some probability). The monetary losses were matched to each individual’s subjective monetary evaluation of the side effects, permitting a within-subject comparison between affect-rich and affect-poor choices in otherwise monetarily equivalent problems. This was cleverly done. Specifically, participants were first asked to indicate the amount of money they considered equivalent to specific nonmonetary outcomes (here: side effects; Fig 1A). The monetary amounts indicated (willingness-to-pay; WTP) were then used to construct individualized lotteries in which either a side effect (affect-rich problem) or a monetary loss (affect-poor problem) occurred with some probability. For example, consider a participant who specified a WTP of $18 to avoid insomnia and $50 to avoid depression. In the affect-rich problem, she would be presented with a choice between drug A, leading to insomnia
with a probability of 15% (no side effects otherwise), and drug B, leading to depression
with a probability of 5% (no side effects otherwise). In the corresponding affect-poor problem,
she would be presented with a choice between lottery A, leading to a loss of $18 with a probability of 15% (nothing otherwise), and lottery B, leading to a loss of $50 with a probability of 5% (nothing otherwise). This paradigm allowed the authors to compare the decision mechanisms underlying affect-rich versus affect-poor risky choice on the basis of lottery problems that were equivalent in monetary terms (Fig 1A and 1B).



To assess whether experiencing a side effect was rated as evoking stronger negative affect than losing the equivalent monetary amount, Suter et al analyzed the ratings. Fig 2. presents them.

Were the differences in affect associated with different choices? Their findings showed that, despite the monetary equivalence between affect-rich and affect-poor problems, people reversed their preferences between the corresponding problems in 46.07%  of cases, on average. To examine the cognitive mechanisms underlying affect-rich and affect-poor choices, the researchers modeled them using Cumulative Prospect Theory (CPT). On average, CPT based on individually fitted parameters correctly described participants’ choices in 82.45% of affect-rich choices and in 90.42% of affect-poor choices. Modeling individuals’ choices using CPT, they found affect-rich choice was best described by a substantially more strongly curved weighting function than affect-poor choice, signaling that the psychological impact of probability information is diminished in the context of emotionally laden outcomes. Participants seemed to avoid the option associated with the worse side effects, irrespective of their probabilities, and therefore often ended up choosing the option with the lower expected value.

The neural testing was complicated and used extensive computational modeling analysis. Neuroimaging analyses further supported the hypothesis that choices between affect-rich options are based on qualitatively different cognitive processes than choices between affect poor options; the two triggered qualitatively different brain circuits. Affect-rich problems engage more affective processing, as indicated by stronger activation in the amygdala. The results suggested that affect-poor choice is based on calculative processes, whereas affect-rich choice involves emotional processing and autobiographical memories. When a choice elicits strong emotions, decision makers seem to focus instead on the potential outcomes and the memories attached to them.

According to Suter et al, on a theoretical level, models assuming expectation maximization (and implementing the weighting of some function of outcome by some function of probability) may fail to accurately predict people’s choices in the context of emotionally laden outcomes. Instead, alternative modeling frameworks (e.g., simplifying, lexicographic cognitive strategies) may be more appropriate. On a practical level, the researchers suggest that to the extent that people show strongly attenuated sensitivity to probability information (or even neglect it altogether) in decisions with affect-rich outcomes, different decision aids may be required to help them make good choices. For instance, professionals who communicate risks, such as doctors or policy makers, may need to pay special attention to refocusing people’s attention on the probabilities of (health) risks by illustrating those risks visually.

This paper does not present things in ways that I have seen often. It focuses on the most compensatory analytic strategies like prospect theory and says that these strategies do not reflect how we make decisions that are emotionally laden.  It suggests that simplifying lexicographic strategies may be more appropriate. Other studies that have used decision times and eye tracking instead of fMRI have made it clear that compensatory analytic strategies do not reflect actual decision making, although not as definitively. We also know it from our own experiences. However, from my understanding, this does not necessarily push us to lexicographic strategies. There are compensatory strategies like parallel constraint satisfaction that might also be the explanation. It may be that this is just part of the cognitive niches v. parallel constraint satisfaction or evidence accumulation decision models debate. Fuzzy trace theory is another candidate that is not a lexicographic strategy.



Dialectical Bootstrapping

bootstrapsI mentioned this in my last post and could not resist it. It is based on a 2009 paper by Herzog & Hertwig,  “The Wisdom of Many in One Mind Improving Individual Judgments With Dialectical Bootstrapping.”  How can a set of individually mediocre estimates become superior when averaged? The secret is a statistical fact that, although well known in measurement theory, has implications that are often not intuitively evident . A subjective quantitative estimate can be expressed as an additive function of three components: the truth (the true value of the estimated quantity), random error (random fluctuations in the judge’s  performance), and systematic error (i.e., the judge’s systematic tendency to over- or underestimate the true value). Averaging estimates increases accuracy in two ways: It cancels out random error, and it can reduce systematic error. This reminds me of Scott Page’s diversity prediction theorem which simply states that the crowd’s error = avg error- diversity. I expect to look at systematic error and diversity in future posts, but for now how can we conduct a dialogue with ourselves and improve our predictions?

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