My uncle's taxi: irrational decision making?

When I was growing up, my uncle, who was a taxi driver used to take me for a ride on his taxi. He would drive around the city, while I would sleep on the back seat for most of the time. On busy days, when he made more profit quickly we would end up on the beach eating ice-cream. If he kept counting the income he had gained, I knew it would be a long day in the taxi while if he smiled and yawned along the way I knew that he was close to making his daily target, which of course meant, ice cream. Given my uncle’s massive amounts of debt (to which I was oblivious back then) I wonder why he’d rather have ice cream with a 10 year old than work more to make more money. Indeed one would expect that my uncle would work more hours on a busy day when his wage rate was higher. I don’t know if he regrets such working patterns now that he is retired but as we had the opportunity to find out in the context of this module, research shows that my uncle was not the only ‘lazy’ taxi driver. Indeed many New York taxi drivers finish work when they reach a target that has been pre-set. That is, they typically work fewer hours on busy days than on slower days, as on busy days they reach the income target faster (Hardman, 2009).

Nonetheless, such a working pattern seems somewhat irrational. Indeed rational labour-market theory proposes that those taxi drivers would work longer hours on busy days, when their hourly wage-rate is higher. Nonetheless such a seemingly irrational behaviour has been explained in terms of prospect theory (Kahneman & Tversky, 1979), which describes how people make decisions between alternatives that involve risk by evaluating potential losses and gains. Prospect theory that claims that people are generally ‘loss averse’ i.e. they get less utility for say gaining £1000 than they would lose if they lost the same amount. People set a reference point and evaluate outcomes as gains or losses relative to that point. This idea can explain the working patterns of taxi drivers described above: achieving the set daily target (reference point) is seen as a win minimising incentive to keep working. On the other hand, failing to achieve the daily income target is seen as loss, and the loss aversion tendency makes taxi drivers work longer to avoid loss altogether.
I can’t help but think that for my uncle who is still swimming in debt, trying not to drown, this will be great news. After all, he was not the only one...

Hardman, D (2009). Judgement and Decision Making: Psychological perspectives. Chichester: Backwell.

Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47 , 263-291.

Luna

Aspects of endowment or the double standards of selling and buying precious stones...

Back in the good times of being better off financially, I used to deal gem stones mainly because I’ve always had a passion for jewellery which led me to study jewellery design in the past. I remember always grappling with the high prices I had to pay for precious and semi-precious stones and also the prices I would get for my designs that I perceived to be lower than the value that I had judged for my own designs. Even though the stones I bought and sold were certifies as equal according to the international grading standards, I often thought that the ones I had had more attractive colours, or more clarity or just looked ‘more polished’. At least they looked more polished to me therefore I estimated a higher value for them than other stones that I would buy that were of the same quality. Not surprisingly, cognitive theorists have picked up on this, and the class discussion on endowment theory came to shatter my illusion that I had the best gemstones ever, that should have sold for a lot more than they were sold for…

Endowment refers exactly to how we judge the monetary value of objects and how such judgement predicts subsequent decisions made. More specifically a value of an item can be judged in two ways: how much we are willing to accept loss of an object for (i.e. to sell the object) and how much we are willing to buy it for. At some level the idea that we value objects that we own more than those that we don’t seems commonsensical perhaps due to emotional influences (we get attached to objects that we own). Research suggests that even when an item has recently come into our possession, we still value it higher as we are averse to the idea of giving things up.
Francis, Haubel & Keinian (2007) have proposed an account of endowment drawing upon memory concepts. This memory based account suggests that while buyers of items produce more value-decreasing aspects (i.e. negative thought about the item), sellers produce more value-increasing aspects (i.e. positive thought about the items). In effect, when I was selling diamonds I might have been producing more positive thought about the diamonds that I sold, arriving at higher valuations while following the opposite procedure when buying diamonds.

Such endowment effects readily branch out to many real life situations. For instance in the current recession climate, a house seller might be unwilling to accept a lower price, even though the price is still higher than they paid for to buy the house at the first place. In such cases eliminating endowment effects, i.e. by framing losses as potential gains, would overcome such rigidity. Indeed when the market seemed to recover for a while, sellers revaluated such losses as potential gains on the new house they were now (hypothetically) able to buy, hence accepting lower prices.

I wonder how much emotion plays a role in this, and if endowment could be extended to situations that monetary value and emotions are in interplay and situations were ‘on-objects’ are involved. As a person who is probably obsessed with English bulldogs, as with many other English concepts, I have been actively involved in breeding and rescuing dogs for the last 3 years seeking to better the breed standards. When I deal dogs both in the UK and abroad I often think that the ones that I have bred are in many aspects better than the ones that I buy off other breeders. I am not suggesting that bulldogs are in any way object-like but I found the discussion on endowment very interesting as it made me think that there is a difference in valuing my own dogs and those I buy from others. For instance I always ask for higher prices for my dogs sold to kennels abroad than the ones I buy with very similar pedigrees and bloodlines. I thought that mine always just ‘looked cuter’ and were in some mysterious way an improvement to the breed standard. To have endowment theory elucidate such cognitive patterns is very interesting. Nevertheless, the possibility that such thought are exactly that, patterns, that can be sussed out in relation to whether one in a buyer of a seller, doesn’t make my very special bulldog, Luna (pictured here) any less special!!

References

Johnson, E.J., Haubl, G. & Keinan, A. (2007) Aspects of Endowment: A query Theory of Value Construction. Journal Of Experimental Psychology, 33(3), pp.461-474.

Hmm... fast and frugal 'reflection' ?

In reply to David Hardman's comment on my thoughts about the heuristics and biases paradigm and the current approach to the whole of psychology, I went back and read Dhami's (2003) write up of the bail decision study, trying to keep a more objective stance. It seems that I had made some unfounded assumptions at the first place, which warrant further attention to my own reflective processes (more on this later). To begin with I failed to see Dhami's findings in their particular context. That is, the paper discussed bail decision and not jury or juror decision making processes. There is certainly a qualitative difference between a bail or jail decision by a magistrate, pending later trial, and later stage legal decision making. The pescriptive validity of fast and frugal heuristic (at least in the context described in the study discussed here) is evident. Nonetheless, what is the importance of judgemental accuracy of such heuristics if people don't actually use them? There is nothing to suggest that we can be certain that people actually use such heuristics in general or exclusively, and even if they do under certain circumstances (i.e. time constraints) it seemes dubious to generalise.

To stay within the context of decision making in courts, consider the widely popularised R v Maxwell case. In January 1996, Maxwell bros were cleared of all charges to defraud pension funds of £400 million, against the weight of evidence and public opinion. This case is a prime example of a 'perverse acquittal', i.e. a jury decision that goes against public opinion and what the evidence suggests. Surely, jury decision making is a group process and as such different than individual decision making discussed here, but leaving group dynamics or conformity etc, aside, it would be reasonable to suggest that individual jurors 'world knowledge', i.e. their beliefs about 'how things are' may have their role in such cases and some form of cognitive architectural equation would be unlikely to predict the outcome in such cases. Thus, jurors may as well employ heuristics but a judgement may also be influenced by individual differences and by the use of one's own world knowledge. Enquiring into the phenomena of consciousness, by asking people what they think while judging, or, from a more quantitative point of view, measuring attitudes and biases by using scales and questionnaires would also elucidate aspects of judgement other than heuristics.

Therefore one's world knowledge may affect one's decision/behaviour/judgement, and particularly on my own world knowledge, this is exactly what happened when I wrote the previous post. That is, the way I see the world, and thus the way I see psychology, cognitive psychology and research methodology caused me to adopt a somewhat close-minded attitude, when reading about the role of heuristics in human judgement. On second thought, heuristics seem to be part of the picture and as such give a better insight to phenomena of decision making (even though I still don't see how a mathematical equation could address the complexity of judgement and not miss exceptional cases and more subjective aspects). It is important not to see things as mutually exclusive and to return to my previous post, both quantitative and qualitative methodologies seem to have their own strengths and limitations but could perhaps be used to describe different aspects of reasoning.


Dhami, M. K. (2003). Psychological models of professional decision-making. Psychological Science, 14, 175-180.

On Judges, Judging...or the quest for 'essence' in psychology

In an applied Cognitive Psychology module concerned with Judgement processes such as the one for which this blog is devised and undertaken, it seems almost natural to talk about those who judge by profession, i.e. court judges. Drawing upon a research article by Dahmi (2003) that explored the processes of decisions taken by professional judges in courts, I have had to participate in devising a small presentation on the role of heuristics in such contexts.

In contrast to legal theory, which in a somewhat commonsensical way, assumes that judges evaluate all information that is available to them in order to arrive to a decision, cognitive psychological research such as the paper mentioned above has claimed that people use heuristic strategies that depart from weighing and combining all available information appropriately. Such a claim was based on Dahmi’s (2003) study that tested the ability of two decision making models to predict bail decisions in courts. On one hand, heuristic strategies search only a part of all available cues and even base a decision on one single cue. For instance the matching heuristic (Dhami & Ayton, 2001) was tested in the aforementioned research as a predictor of judges decisions are taken in a non-compensatory way (i.e. without ‘weighing’ or judging the importance of all pieces of information available). It attracts attention to information that is pre-consciously selected as relevant (Evans, 1998) as follows: If the first cue that is encountered gives a reason for a punitive decision then such a decision will be predicted, while if the first cue doesn’t give a reason for being punitive the second one will be examined. If the second cue gives a reason for a punitive decision then such a decision can be predicted, if not a non-punitive decision will be reached (it should be noted that a subset can encompass more than two cues). For instance, in the court study prosecution requests and previous convictions where two cues that were used in such a way. In contrast, historically it has been proposed that linear regression models are used to reach judgements. That is, all available pieces of information are searched, differentially weighed and combined to reach a decision (Dahmi, 2003). Such a process is described by Franklin’s rule (Dahmi, 2003). When Benjamin Franklin, one of the founding fathers of the USA, had an important decision to make, he would examine the situation and make a list of all the factors favouring each of his possible options (i.e. pros and cons). Then based on all the information on his list, he would make his decision. In a computational model, such a principle would mean that a weighting function would be applied to all cues available and therefore a decision would be reached in a due process, slowly and statically. Psychological research such as the study described here, has indicated that judges bail or non-bail decision processes are ‘fast and frugal’ (Dahmi, 2003). Judgements are better predicted by a simple matching heuristic, than a process integrating all available information, and might even be based on a single cue!

At first, such findings contradict legal theory and perhaps public perception of justice, That is, people tend to think that a judge would examine all available information carefully to arrive to a decision that might have a dramatic impact on someone’s life. Yet what is demonstrated by cognitive psychology here is that out perceptions of justice may be unrealistic. At some level there is something horrific about this. The almost un-thoughtful rapidity and perhaps ‘close-minded’ equations of different (but similar) cases make me wonder how many court rulings have been as ‘fast and frugal’ as implied here as opposed to the analytical, thoughtful and carefully weighed decisions put forward by the legal discourse.

It was suggested in class that such findings highlight the need for cognitive training of judges in order to help them consciously use more of the information available. Suggestions even went as far as to suggest that a computational equation derived by simple heuristics would actually be well suited to ‘decide and judge’ rather than people doing so. Nevertheless I am still grappling with the idea that decision making is in fact ‘fast and frugal’, especially in courts or similar contexts. Firstly, it seems a bit dubious to generalise such findings and prescribe simple heuristics as ‘explanations’ of human judgement. If anything, such heuristics simply describe processes but don’t explain much about them. Still, just because a descriptive model is a better predictor of final decisions, doesn’t necessarily mean that decisions were actually reached the way the model prescribes. Moreover, assuming that shorter decision times mean less information examined ignores emotional influences and individual differences of those who decide and different characteristicsbetween cases to decide upon..

Being the liberal that I am, I find the idea of reducing human judgement to a computational equation sinister. Such an approach seems valid as a description (if we accept the inherent assumptions that it entails) but has little or no prescriptive validity. The idea that a computational heuristic can simulate human judgement seems constructed and arbitrary as it ignores the phenomenological characteristics of human judgement. That is, it attempts to study the content of though than the actual experience of thinking and deciding and by doing so it ignores consciousness. Why wouldn’t a cognitive psychologist enquire into the phenomena of consciousness by asking people (judges in particular) how they arrived at a particular judgement? How can one assume that this is irrelevant? How can one assume that all cases are treated the same way and that qualitative characteristics of those cases are dismissed or that the emotional influences that such cases or particular characteristics of those cases induce don’t come to play? Why is there a problem with each case being treated as an exception?

It is ironic that cognitive psychology has left experiential and subjective aspects of experience behind and it has attempted to reduce thinking and deciding to an information processing mechanism, leaving the role of feelings, affective and non-affective or sensory, aside (Clore, 1992). From the spreading activation model of memory (Collins & Loftus, 1975) to the ‘revolutionary’ insights to perception, that might actually be more relevant to ophthalmology and not psychology (Klein, 1989) subjective experience, emotion (as such), and individuality have been overlooked.

Yet I feel it is important here to position myself in relation to the concepts discussed here and my own feelings about these concepts described above. As a very liberal individual, I often think of science as socially constructed. I have often questioned the so called scientific methodology and the essentialist assumptions that it entails and I have advocated qualitative research in psychology as an alternative to the prevailing quantitative methods employed. Cognitive psychology has always seemed dubious to me, throughout this degree course as it seems to ignore the very notion that gave birth to it: cognitivism. Dhami’s (2003) study is, to me, another example of how the discipline has been reduced to the study of information processing and I can’t help but wonder: Do we need more ‘quality’ in cognitive psychology? Do we need to revisit the concept of ‘cognitivism’ that once gave rise to this discipline as alternative?

References

Clore, G. (1992). Cognitive Phenomenology: Feelings and the Construction of Judgement. In L. L. Martin & A. Tesser (Eds.). The construction of Social Judgement (pp. 133-163). Hillsdale, NJ: Erlbaum.

Collins, Allan M.; Loftus, Elizabeth F., "A spreading-activation theory of semantic processing", Psychological Review, 82, 407-428.

Dhami, M. K. (2003). Psychological models of professional decision-making. Psychological Science, 14, 175-180.

Dhami, M. K., & Ayton, P. (2001). Bailing and jailing the fast and frugal way. Journal of Behavioral Decision Making, 14,141-168.

Evans, J. (1998). Matching Bias in Conditional reasoning. Do we understand it after 25 years? Thinking and Reasoning, 4, 45 – 110.

Kein, P. (1989). Psychology Exposed or The Emperor’s New Clothes. New York: Routledge.

The winds of Change: Online Learning

After attending the introductory lecture to the partucular module for which this blog was designed, I was left thinking that the wings of change have already transformed university education. The module in question forms part of the BSc in Psychology curriculum at London Metropolitan University and it is assessed alomost exclusively in online formats. Reflective blogs, wikis and online learning environments all form part of the learning experience here. But what does this actually mean?

Surely, being able to access material at any time and place is convenient. I have always had a theoretical interest in learning styles and it is obvious to me that online learning can accommodate different learning styles (Bonanno, 2005).Ironically, having struggled for two consecutive days to post here using a mysteriously slow and disorganised mobile broadband connection, I fround myself keeping a written reflective journal in order to transfer my thoughts here at a later time. Clearly when technology doesn’t work, online learning seems such a tremendous task! The question for me is how -since it’s cognitive psychology we are talking about here- the frustration that such technological mishaps cause interfere with the cognitive processes of learning. I will revisit this idea throughout the course, being aware of the interplay between such affective influences and cognitive processes in the context of my online learning experience. If judgement involves evaluation and decision implies a way of action (Hardman, 2009), it will be interesting to form a judgement on online learning based on my own experience here, and to decide how I can use this rescource to engage with the learning material.

To my surprise as I found myself procrastinating more than usual, I found out that online learning may actually require more motivation and the responsibility to generate such motivation lies with the learner. Here I need to take initiative to access tha learning process and engage with the learning material which raises issues of self-awareness and self-regulation. In other words, is the successful online learner a more ‘grown-up’ learner? As the flexibility of online learning allows more time away from the educational task, it paradoxically gives rise to increased discipline and I find this challenging.

Online education clearly defeats great distances, is cheaper and faster and perhaps more accessible. But do we have to do away with the social and interractive aspects of learning? Now the question is on education: Will all education be conducted through the Internet in the future?

References

Bonanna, K. (2005). Online Learning; The Good, The Bad and The Ugly. Paper presented to the Australian School Library XIX Association Biennial Conference – Meeting the Challenge, Zillmere, April 2005.

Hardman, D (2009). Judgement and Decision Making: Psychological perspectives. Chichester: Backwell.