This post is based on a review paper “Mindful Judgment and Decision Making,” Elke U.Weber and Eric J. Johnson, Annual Review of Psychology, 2009, 60:53–85, on the state of judgment and decision making research. The post is in the outline form set up by Weber and Johnson and more or less summarizes accumulated knowledge. It continues in the next post. All I have done is create a sort of Cliff’s Notes version. Much of it is directly quoted without proper attribution in the interest of clarity and my laziness.
1. Exogenous Influences
Herbert Simon saw conscious attention as a scarce resource for decision makers. Some features of the environment attract attention because responding to them has survival value. A range of JDM tasks and context characteristics have been examined for their effect of guiding attention and thus decision weight to different outcome dimensions. Violations of procedure invariance are one of the most vexing cases of deviation from normative models of preference. Selling prices typically exceed buying prices by a factor of two, even when strategic misrepresentation is eliminated,
Consumer purchases are typically the result of choice from among multiple alternatives,
where alignable features receive greater attention, whereas post purchase consumer satisfaction is the result of judging the product by itself, where features that are easily evaluated in an absolute sense receive greater attention.
The way in which information about choice options is communicated to decision makers influences preference construction through selective attention, even though variants may be informationally equivalent. One of these ways is the order in which options are presented. Certainty and immediacy are connected, in that adding delay “undoes” the special preference given to certainty, and adding uncertainty removes the special preference given to immediacy.
The emergent evidence that rare events get under weighted in decisions from experience but over weighted in decisions from description, as captured by PT (Prospect Theory and Cumulative Prospect Theory), can be explained by differences in attentional focus during information acquisition, because attention directed by both external and internal factors has been shown to translate into decision weight.
2. Endogenous Influences
A range of factors has been shown to situationally activate goals or chronically elevate their accessibility, including cultural values of the decision maker and the content domain of the decision.
Emotions experienced by the decision maker act as a spotlight focusing attention on features of the environment that matter for emotion-appropriate action tendencies (Feeling is for Doing). Mood-congruent perception focuses attention on either upside opportunity or downside risk. Feelings of fear or worry focus attention on the source of the apparent threat and ready flight responses. Feelings of anger focus attention on information about motives and responsibility and make decision makers eager to act and punish. Sadness elicits a desire to change one’s state, resulting in reduced selling and inflated buying prices, whereas disgust triggers a desire to purge or acquire less, with the opposite effect on willingness to pay. (What to do about Emotion and Emotion and Decision Making).
ENCODING AND EVALUATION
One distinction to make is between information obtained from a search of external sources (external search; e.g., when choosing a cereal by studying product information in a
supermarket aisle) versus information retrieved from memory (internal search; e.g., when retrieving options about which route to take on a drive home).
1. Evaluation is Relative
Since neurons encode changes in stimulation (rather than absolute levels), absolute judgments on any dimension are much more difficult than relative judgments. This lies at the root of Ernst Weber’s 1834 observation that detectable increases in visual or auditory signal intensity are proportional to the starting value, i.e., need to be larger for larger starting values.
Decision makers pay more equal attention to all possible outcomes than is warranted by their (typically unequal) probabilities, and decision makers linger at extreme outcomes to assess best- and worse case scenarios.
2. Choice from external search
Prototypical of a class of models that could be characterized as stimulus sampling models
is Busemeyer & Townsend’s decision field theory (DFT). The key idea in DFT is that attributes of choice alternatives are repeatedly randomly sampled and that evidence accumulates over samples. This process of information retrieval, whether from the external environment or from memory, is assumed to be independent of the evaluation of the object, i.e., is not path dependent. In addition to having a closed-form mathematical formulation, DFT can also be expressed as a multilayer connectionist network and has been applied to explain context effects such as the similarity, attraction, and compromise effects.
Decision by distortion. Stimulus sampling models typically assume samples that are unbiased
reflections of the environment and are path-independent. In contrast, two streams of research suggest that choice involves a biased, and path-dependent, integration of information. Holyoak & Simon(Bidirectional Reasoning) posit that choices are sped up and made with minimal regret by distorting the value of options to support early-emerging favorites.
Several researchers have argued that biases can result from biased sampling of external information, either as a function of how the information is presented by the environment or by biases in a search on the part of the decision maker, aided by the decision maker’s lack of understanding the biased origin of the sample.
Memory is necessary for our ability to learn and to draw on past experience to predict future desires, events, or responses to outcomes.
1. Memory Storage and retrieval
Memory accessibility and priming. Seeing a stimulus results in a short lived increase in accessibility of the representation of that stimulus and related concepts, a phenomenon called
priming, with effects on subsequent memory access, i.e., shorter reaction times and greater likelihood of retrieval. Memory is reactive. Unlike computer memory, human memory is changed by attempts at retrieval. Accessing memory both increases short-term accessibility and changes the long term content of memory.
Short-term effects. Studies of anchoring suggest that priming memory accessibility, and consequently preference, can be changed by asking a prior question, even if the answer to this question should be irrelevant to subsequent tasks, such as using the last four digits of a social security number as an anchor for pricing a gamble.
Retrieval and preference construction. A recent perspective on preference construction, query theory(QT), suggests that decision makers consult their memory (or external sources) with queries about the choice alternatives, in particular their merits or liabilities. This suggests that the process of preference or inference construction is characterized by systematic path dependency, contrary to the assumptions of most mathematical models of judgment and
2. Memory and Inference
Memory-based heuristics for inference. The use of the Take the Best (TTB) strategy appears
to vary in a way that is adaptive given the environment, with more intelligent decisions
makers being more adaptive. The number of processes in the adaptive toolbox is large, and their use is adaptive to task characteristics (Evidence Accumulation Model and Simple Heuristics at work in the world).