JUDGMENT AND DECISION MAKING Module 14 Prescriptive approaches

JUDGMENT AND DECISION MAKING Module 14 Prescriptive approaches (debiasing)

We learned a lot about biases § Framing § Anchoring and adjustment § Representativeness heuristic § Availability heuristic § Overconfidence / Unrealistic optimism § Hot hand fallacy / Gambler’s fallacy § Affect heuristic § Psychic numbing / Collapse of compassion

So what can we do about them? § We didn’t get to talk much about them § Overconfidence (Planning fallacy) § Premortem

We learned a lot about biases § Talk with your partner and develop a prescriptive strategy for one of the biases we learned about § Anchoring and adjustment § Representativeness heuristic § Conjunction fallacy / base-rate neglect § Availability heuristic § Overconfidence / Unrealistic optimism § Hot hand fallacy / Gambler’s fallacy § Affect heuristic § Psychic numbing / Collapse of compassion

Nudging § Proposed by Thaler and Sunstein (2009) § Nudge: § “Any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. ” § In public policy, nudges should be used to influence choices in a way that will make choosers better off § Does the COM 419 course policy on participation count as a nudge?

Choice architecture § Carolyn, a director of food services for school cafeterias has learned over time that § Without changing any menus, § Simply rearranging healthy items (e. g. , carrots sticks, salad) by making them more visible (e. g. , center of cafeteria, eye level) § Increased their chance of selection over unhealthy items (e. g. , French fries, sweet desserts) § Carolyn is a choice architect: § Organizes the context in which people make decisions

Choice architecture § Designing ballots voters use to choose candidates § Almost 10% of East St. Louis voters did not have their vote counted for U. S. Senate. § The state average was 4. 4%

Choice architecture § Doctors presenting treatment options: § “With the surgery, there is an 80% chance of success but 20% chance of failure. ”

Choice architecture § So what should Carolyn do? 1. Arrange the food to make the students best off, all things considered 2. Choose the food order at random 3. Try to arrange the food to get the kids to pick the same foods they would choose on their own 4. Maximize the sales of the items from the suppliers that are willing to offer the largest bribes 5. Maximize profits

Choice architecture § “There is no such thing as a neutral design” § Choice architects “nudge” for the public good when they structure people’s choices to make their lives longer, healthier and better § This does not remove any choice options § But weakly, softly, and non-intrusively influence people so that they are more likely to make choices that make them better off

Examples of nudging § Setting defaults – Organ donation

Examples of nudging § Setting defaults – Organ donation § Explicit consent (opt-in, gold) and presumed consent (opt-out, blue).

Examples of nudging § Creating a “target” – Urinals

Examples of nudging § Changing the plate size § Kallbekken and Sælen (2013): Reducing the plate size helped reduce food waste at a buffet by 20%

Discuss with your partner § A typical behavior on campus that you’d like to see change § And how you could use nudging to accomplish that § Changing the structure / context of the choice § Without removing choice options § Without impacting the economic incentives significantly

Nudges are not without critics § Nudges may compromise people’s autonomy § Even provoke reactance or public resentment when people feel that they are manipulated § “Who are you to know what I’d prefer? ” § Nudges may compromise people’s ability to form/learn preferences § Relieve the need to use System 2 to form thoughtful judgments about what they should do and how to use self-control § Nudges are not transparent § Unlike regulatory mandates discussed in legislature § Nudges may be deployed covertly without awareness