Week 9 - 10 & 11

Week 9 was supposed to give us the opportunity to work on our presentations, which are due in the following two weeks. Our topic is Moral Judgement. My part in this assessment is to summarize a paper by Koenigs and his colleagues. The paper is about the Ventromedial Prefrontal Cortex and the involvement in human moral judgement. In week 10 we heard the presentation about Social Dilemmas. Week 11 was our turn eventually. A summary about the topic with extra content can be seen in the final semester coursework.

Week 8

This week was a kind of revision of what we had so far. This was done by small exercises for the class. I especially liked the increasing difficulties in these exercises. Overall it was a good way to find out in which areas I should do some extra reading in case there will be difficult decisions in everyday life that are comparable to the decisions, or if someone asks me to write a blog about these topics :)

Week 7

This week we covered the topic Social Dilemmas. The focus was on Game Theory. Game Theory provides a methodology for analyzing interactions between players participating in a competition. The simplest version of an example would be the penalty shoot in a football match. What would be the best option for each player? Probably to aim for the middle, if you are the shooter, and to stay in the middle if you are the goalie. However, there actually is no ‘perfect’ solution for both players. Whatever happens in this situation there is always one side that has a better outcome, might it be to score or to save the ball.

The Nash Equilibrium is a solution concept in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain. If each player has made a decision and no player can benefit by changing this decision while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs form a Nash equilibrium. This example can be seen in the movie The Beautiful Mind by Ron Howard.

What would you do – Blonde or Brunette?

To my mind Game Theory and Nash Equilibrium only provides explanation for the decision one makes in competitive situations. What one should do or should decide, however, cannot be described by the mentioned theories.

Week 6

There was no lecture this week, what does not mean that there were no decisions to make. On the contrary three important things went through my head.

First, there are still some alterations to make on my proposal and ethical application for my final year project. Second, there is the deadline of an essay for another course, and finally there are exams in “only” two months time.

Which of these “dilemmas” has a higher priority? The only way to figure that out is to examine when each of these works is due. The closest deadline would be the one for the essay (unfortunately the next week), which means I should start working on this one first. However, the final year project is more important. Does that mean I should work on this and maybe risk a bad mark in the other course? Considering the deadline AND the fact I might fail the module due to failure of submission of coursework, I should rather finish the essay first and later take care of the project. That’s sorted out and next week there will be another topic with more scientific content :)

Week 5

Have you ever wondered why people are afraid of flying, in case you are not one of them? Have you ever asked yourself, is flying actually more dangerous than cars or trains? The department of transport recorded 2538 road deaths for the UK in 2008. According to the Aircraft Crashes Record Office 884 people died in a plane crash the same year. Although it looks like flying is safer than driving a car more and more people are afraid of boarding a plane. Why?

The most obvious and simplest reason is the media. Aviation disasters are more likely to be broadcasted on television than a car crash where several people died. Therefore people are more exposed to pictures and reports of accidents involving a plane than a car, which furthermore results in the development of a fear of flying. These individuals formed an association between the news, flying and a plane crash. When people asses the frequency or the likelihood of a certain event by the ease with which associations come to their mind, they use the availability heuristic (Tversky & Kahneman, 1973).

Tversky and Kahneman (1973) observed that participants estimated the number of words that has r as first letter to be higher than words that have r as third letter. The same had been proofed with the letter t in a later study (Gabrielcik & Fazio, 1984). These two observations occurred because it is easier to bring words, which start with r or t to your mind. Whereas it is harder to think of words that have these two letters as their third letter.

Schwarz and his colleagues designed three experiments to proof the availability heuristic. In the first condition participants were asked to describe either 6 or 12 examples of assertive or unassertive behaviour. Schwarz and colleagues found out that the recall affected the assertiveness or unassertiveness only when the recall process was experienced as easy. Participants gave more assertive behaviour with 6 examples and more unassertive behaviour when asked to recall 12 examples.

In the second condition participants were told that in previous studies people rated certain examples as more difficult. Although participants in Schwarz and colleagues’ study received this information, their decisions were not influenced towards the reported direction.

In the third and last condition participants heard a piece of music. They were either told that the music facilitated recall in an assertive situation or that the music facilitated recall in an unassertive situation. According to previous research recall performance showed the opposite direction.

Schwarz and colleagues’ research proofs that people assess the likelihood of occurrence of an event according to the ease of which associations come to their mind. I personally think that this theory is very accurate and accounts for a lot of situations in our social life. Before I moved to London I only saw negative news about people form Pakistan on the television. After getting in contact with some of them in university, however, I made the experience that their intellect and creative potential will never be shown on television. The availability heuristic explains this stereotypical thinking, but the best way to avoid building stereotypes is to make your own experience.

Week 4

How many clues do you need?

What did we have so far? We heard that when we have to make decisions, we either examine the most important cue that is available to us or we examine all available cues for the current situation. In case the decision maker examines all cues, he or she assigns certain values or weights to these cues and makes a decision. So far I wrote that the simpler matching heuristic is a better predictor of decision making, although, it only searches through a small subset of cues.

If you were offered £500 with a probability of .50 (500, .50) otherwise nothing or £2500 with a probability of .10 otherwise nothing (2500, .10), which gamble would you choose?

In a study with Austrian students 88% would choose the first gamble with the smaller probability of the minimum gain but the lower maximum gain (Branstätter et. al., 2006). The researchers developed the priority rule in which we consider reasons in the following order: minimum gain, probability of minimum gain, maximum gain.

However, when should one stop considering these rules, or should you always examine each of the criteria? To answer this question read the following gamble (it’s the last one, I promise!).

You were offered either £200 with a probability of .50 (200, .50) otherwise nothing or £100 for sure. If you would be offered £2000 with a probability of .50 (2000, .50) otherwise nothing or £100 for sure, you might select a gamble with a different outcome. The minimum gains differ by the same amount and the probabilities are the same. The maximum outcomes, however, are different (1. £100, 2. £1000). Therefore a stopping rule has been proposed: Decision makers stop examination when the minimum gains differ by 1/10 (or more) of the maximum probabilities.

These two rules together and the decision rule, which tell you to choose the gamble with the more attractive gain, define the priority heuristic. The priority heuristic is able to explain shortcomings in decision making, e.g. the Allais Paradox or the Certainty Effect.

Week 3

How much are YOU willing to risk?

Consider the following gamble: You are offered either a sum of money for certain or a lottery ticket that will give you a 50% chance of winning £10.000 and a 50% chance of winning nothing. What would be the certain sum that makes you indifferent whether to receive it or the lottery ticket?

Below you find two graphs that show my results with different sums and different probabilities.

These graphs show that I am a rather risk aversive person. Your graphs might look the same or you are a rather risk seeking individual, which would alter your curve from the bottom at lower sums and probabilities to the top with higher sums and probabilities.