Decision Making Chapter 7 Definition of Decision Making

Decision Making Chapter 7

Definition of Decision Making Characteristics of decision making: a. Selecting a choice from a number of options b. Some information available with respect to choices c. Time frame is relatively long > 1 sec d. Choice is associated with uncertinty

Classical Decision Theory n Normative Decision Models – expected value of the outcome (win $50 with P. 5). Optimizing choice from all possible. n Descriptive Decision Models – most decision makers violate the assumptions of normative decision making (optimum solution). Base decisions on simpler method of looking at a few options and selecting one that is acceptable (satisficing). Shifting to simplifying heuristics.

Example Normative Decision Alternative State of Nature/Probability Expected N 1: Dry Hole N 2: Sm Well N 3: Big Well p 1=. 6 A 1: Don't Drill A 2: Drill Alone A 3: Farm Out p 2=. 3 $ 0 -500, 000 300, 000 0 125, 000 p 3=. 1 $ 0 9, 300, 000 1, 250, 000 Value $ 0 720, 000 162, 500

Heuristics and Biases

Factors & Cognitive Limitations That Effect Decision Making n n n Amount or quality of cue information brought into working memory (WM) Available decision making time Attention Resources Amount & quality of person’s LTM knowledge Ability to retrieve relevant LTM information WM capacity limitations

Heuristics Definition – problem-solving by trial and error: a method of solving a problem for which no formula exists, based on informal methods or experience, and employing a form of trial and error iteration

Heuristics Biases in Obtaining & Using Cues Attention to a limited number of cues n Cue primacy – preliminary cues tend to carry more weight than follow-on cues is the primacy effect. n Inattention to later cues. n Cue salience (noticeable) bias. n Overweighting of unreliable cues or treating all cues as equal. n

Heuristic Biases in Hypothesis Generation A limited number of hypotheses are generated. n Available heuristic – tendency to rely on recent or frequent heuristic. n Representativeness heuristic – judging an event as likely if it represents the typical features of a category n Overconfidence – believing you are correct more often than you really are n

Heuristic Biases in Hypothesis Evaluation & Selection Cognitive fixation – once a hypothesis is generated there is a tendency to ignore subsequent cues. n Confirmation bias – seeking out confirming information and not disconfirming information. n

Heuristic Biases in Action Selection n Retrieval of a small number of actions from LTM. Availability heuristic for actions – tendency to retrieve most available actions which is function of frequency and recency. Availability of possible outcomes – tendency to base decisions on what you think are the best outcome consequences, not what they really are.

Naturalistic Decision Making Definition: The way people use their experience to make complex decisions in a field setting. Problems tend to be: – Ill-structured – Uncertain, dynamic environments – Information rich environment where cues change rapidly – Cognitive processing with iterative/feedback loops – Multiple shifting and competing goals – Time constraints or time stress – High risk – Multiple persons involved in the decision

Skill, Rule, & Knowledge Based Task Performance

More Views of Naturalistic Decision Making n n Cognitive Continuum Theory – decision process occurs along a continuum from intuition to analysis Situation Awareness – perception of elements in environment within a volume of time & space, comprehension of their meaning, & projection of their near future status Recognition-Primed Decision Making – experts recognize a pattern & recall a single course of action Schemas, Stories, & Mental Models – analytical processing begins with situation assessment which yields 2 nd level situation awareness where a mental representation is constructed. Representation is called a story or mental model.

An Integrated Model of Real -World Decision Making

Improving Human Decision Making n n n Redesign situation assessment environment for performance support Training – Help people overcome heuristic biases Decision Aids – Expert Systems – Using computers to capture the knowledge of experts to provide answers to the decision maker – Cognitive Support – Using computers as decision support systems. Any interactive support system that helps the decision maker

Problem Solving Problem solving occurs when there is insufficient knowledge to readily make a decision and creative processes are required. n Characteristics – – – n Person doesn’t have WM capacity Person doesn’t have enough system knowledge Person has system knowledge, but it is disconnected & unorganized Errors & biases in problem solving (similar to biases in decision making) – Poor problem definition – Failure to generate the correct solution plan – Limitations of WM