Category Archives: Feedback/ Learning

Medical Decisions–Risk Saavy

screeningLearnMoreThis post looks at the medical/health component of decision making as addressed in Gerd Gigerenzer’s new book, Risk Saavy, How to Make Good Decisions. First, Gigerenzer has contributed greatly to improving health decision making. This blog includes three consecutive posts on the Statistics of Health Decision Making based on Gigerenzer’s work.

He points out both the weaknesses of screening tests and our understanding of the results. We have to overcome our tendency to see linear relationships when they are nonlinear. Doctors are no different. The classic problem is an imperfect screening test for a relatively rare disease. You cannot think in fractions or percentages. You must think in absolute frequencies. Breast cancer screening is one example. Generally, it can catch about 90% of breast cancers and only about 9% test positive who do not have breast cancer. So if you have a positive test, that means chances are you have breast cancer. No! You cannot let your intuition get involved especially when the disease is more rare than the test’s mistakes. If we assume that 10 out of 1000 women have breast cancer, then 90% or 9 will be detected, but about 90 of the 1000 women will test positive who do not have disease. Thus only 9 of the 99 who test positive actually have breast cancer. I know this, but give me a new disease or a slightly different scenario and let a month pass, I will still be tempted to shortcut the absolute frequencies and get it wrong.

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mindless-muddle-1374093328-6317I first read Lindblom’s paper, “The Science of Muddling Through,” in a comparative systems political science class. It appealed to me then and after more than forty years, it still does. He did a good job of exposing the logical extreme of the rational model as ridiculous, at least in government. At the same time, he used terminology for his incremental model that made it difficult to publicly embrace. As a city planner, I could decry “disjointed incrementalism,” to try to get elected officials to look a bit further into the future, but had he called it coherent accumulation, I would not have ever had a chance. After fifty five years, many of his examples still seem quite relevant.

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What to do about emotion?

passionThis is the second post based on a paper: “Emotion and Decision Making,” that is to appear in the 2014 Annual Review of Psychology. It was written by Jennifer S. Lerner, Ye Li, Piercarlo Valdesolo, and Karim Kassam.

David Hume: “Reason is, and ought only to be, the slave of the passions, and can never pretend to any other office than to serve and obey them.”

Still, most of us have made some bad decisions under the influence of emotion. There are unwanted effects of emotion on decision making, but as Lerner et al note, they can only sometimes be reduced.

The strategies to reduce unwanted effects broadly take one of two forms: (a) minimizing the magnitude of the emotional response (e.g., through time delay, reappraisal, or inducing a counteracting emotional state), or (b) insulating the judgment or decision process from the emotion (e.g., by crowding out emotion, increasing awareness of misattribution, or modifying the choice architecture).

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Persistence by Hogarth

regimeshiftfigure1The last post Persistence looked at persistence as being partially determined by the distribution of the waiting times for the reward. A fat tailed distribution might rationally steer one toward giving up after a short waiting period. Robin Hogarth (Educating Intuition) has recently published a paper: “Ambiguous Incentives and the Persistence of Effort: Experimental Evidence” in the Journal of Economic Behavior & Organization, Volume 100, April 2014, page 1-19, with Marie Claire Villeval that looks at economic activities where the reward is mundane–money.  It is more aimed at looking at what determines our persistence from the employers point of view, but I believe it could be more broadly applicable.

Hogarth and Villeval explore ambiguous situations where economic agents reap the benefits of engaging in an activity across time until – unknown to them – there is a shift (the regime change) in the underlying process and pursuing the activity is no longer profitable. The term regime shift was new to me in the context.  For an old city planner, regime shift meant a new mayor or change in the form of government. Apparently the ecological term more or less runs with the old definition and means abrupt long lasting non-linear change.  Hogarth has helped me understand that humans have made an evolutionary career out of understanding linear change or functions that are linear over the relevant range, while we tend to be weak at non-linear functions. How long will the investor continue to place new orders and does this depend on the regularity of his previous outcomes? How long will an employee keep working in the same firm if she no longer receives a bonus? How is the decision affected by preferences regarding risk and ambiguity and/or the regularity with which bonuses have been paid in the past?

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Persistence1Waiting and delay lead naturally to the concept of persistence. It is interesting that waiting to or delaying before making a decision is procrastination, while waiting for a reward after you make the decision is persistence.  Procrastination is generally panned while persistent is typically praised.

On July 5, 2014, during a repeat of the “Prairie Home Companion,” 40th anniversary celebration show, Dwayne’s mother called him about dumping his novel after only three years. She said:  “You give up so fast. That is why you have never gotten married…You are addicted to new beginnings… And did you hear about that man who has been on the same radio show for forty years?” They go back and forth for a couple of minutes when she says: “Well at least he stuck with something” and her son replies that: “the key there is stuck as in unable to move.”  Dwayne goes on to note that the guy has been married five or six times and his mom answers: “At least he kept trying.”  We all know that the correct amount of persistence is a virtue.

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Checklists/Fast and Frugal Trees

figure.73The checklist is a heuristic. Gigerenzer explains that there needs to be something between mere intuition and complex calculations, and those might often be called rules of thumb.  Although a checklist can be many things, it also fits between mere intuition and a bunch of analytic reasoning. The best checklists are like Gigerenzer’s fast and frugal tree where you take the best of a yes or no question starting with the most important question and work your way down the tree to the decision.  Gigerenzer talks about “ecological rationality”–the match between the structure of a heuristic and the structure of an environment.

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Nonlinear Ecology

nonlineardownloadStanding in the shower preparing to dry off, I consider myself as at my most lucid condition. But as I dry myself with a big fluffy towel, I tend to move on to another place on the towel when my hands feel any moisture. Thus, although I believe that the dryness or the lack thereof of the side of the towel that my hands can feel is unrelated to the side that is drying off my body, I am usually thinking about something else so I still move the towel. I won’t even try to figure out the function for this, but it is clearly a fallible indicator.  Hogarth reminded me of this when he noted our poorer performance when dealing with nonlinear relationships, “Human achievement is lower when there are nonlinearities in the ecology.” (What has Brunswik’s Lens Model Taught?).  This reminds me of derivative financial instruments. My intuition cannot handle a straddled put (I think I made that up.) I can learn and feed it in, but give me 15 seconds to figure it out and my performance will be worse than chance.  This is kind of a big deal if John von Neumann’s analogy is correct:  that studying nonlinear relationships is similar to studying non elephants.

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What has Brunswik’s Lens Model Taught?

IMG_0058 (800x600)This post examines a paper by Robin Hogarth and Natalia Karelaia that represents a mountain of work in preparing a meta analysis that includes about 250 studies using the lens model to study the way humans make decisions that are probabilistically related to cues. The studies were conducted over 5 decades.  Hogarth’s work has been the subject of the posts Robin Hogarth on Expertise and Learning, Feedback, and Intuition. Hogarth suggests the examples of an analyst examining financial indicators to predict corporate bankruptcy, a manager using behavior in interviews to assess job candidates, or a physician looking at symptoms that indicate the severity of a disease. In all of these cases, the simple beauty of Brunswik’s lens model lies in recognizing that the person’s judgment and the criterion being predicted can be thought of as two separate functions of cues available in the environment of the decision. The accuracy of judgment therefore depends, first, on how predictable the criterion is on the basis of the cues and, second, the extent to which the function describing the person’s judgment matches its environmental counterpart.

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Qualifying Broken Windows Theory in the Lab

brokendownloadThis post is based on a paper by several scientists at the Max Planck Institute for Research on Collective Goods. It is a merging of several things that I have been interested in over the years:  social psychology, public good economics, city planning, and epidemiology (at least in a metaphoric sense).  Politicians loved the simplicity of “broken windows,” and I was willing as a city planner to use it if it got more resources for what I wanted. Being tough on crime was an easier sell than normal city planning administration.

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