The psychological principles that govern the perception of decision problems and the evaluation of probabilities and outcomes produce predictable shifts of preference when the same problem is framed in different ways. Reversals of preference are demonstrated in choices regarding monetary outcomes, both hypothetical and real, and in questions pertaining to the loss of human lives. The effects of frames on preferences are compared to the effects of perspectives on perceptual appearance. The dependence of preferences on the formulation of decision problems is a significant concern for the theory of rational choice.

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The Framing of Decisions and the Psychology of Choice

Confirmation bias, as the term is typically used in the psychological literature, connotes the seeking or interpreting of evidence in ways that are partial to existing beliefs, expectations, or a h...

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Confirmation Bias: A Ubiquitous Phenomenon in Many Guises:

Fast and frugal heuristics - simple rules for making decisions with realistic mental resources - are presented here. These heuristics can enable both living organisms and artificial systems to make smart choices, classifications, and predictions by employing bounded rationality. But when and how can such fast and frugal heuristics work? What heuristics are in the mind's adaptive toolbox, and what building blocks compose them? Can judgments based simply on a single reason be as accurate as those based on many reasons? Could less knowledge even lead to systematically better predictions than more knowledge? This book explores these questions by developing computational models of heuristics and testing them through experiments and analysis. It shows how fast and frugal heuristics can yield adaptive decisions in situations as varied as choosing a mate, dividing resources among offspring, predicting high school drop-out rates, and playing the stock market.

Simple Heuristics That Make Us Smart

http://psy2.ucsd.edu/~mckenzie/Kahneman&Tversky1972CogPsych.pdf

Subjective Probability: A Judgment of Representativeness

A review is presented of the book “Heuristics and Biases: The Psychology of Intuitive Judgment,” edited by Thomas Gilovich, Dale Griffin, and Daniel Kahneman.

Heuristics and Biases: The Psychology of Intuitive Judgment

Simultaneous Over- and Underconfidence: The Role of Error in Judgment Processes.

Can the vague meanings of probability terms such as doubtful probable or likely be expressed as membership functions over the [0 1] probability interval? A function for a given term would assign a membership value of zero to probabilities not at all in the vague concept represented by the term a membership value of one to probabilities definitely in the concept and intermediate membership values to probabilities represented by the term to some degree. A modified pair-comparison procedure was used in two experiments to empirically establish and assess membership functions for several probability terms. Subjects performed two tasks in both experiments: They judged (a) to what degree one probability rather than another was better described by a given probability term and (b) to what degree one term rather than another better described a specified probability. Probabilities were displayed as relative areas on spinners. Task a data were analyzed from the perspective of conjoint-measurement theory and membership function values were obtained for each term according to various scaling models. The conjoint-measurement axioms were well satisfied and goodness-of-fit measures for the scaling procedures were high. Individual differences were large but stable. Furthermore the derived membership function values satisfactorily predicted the judgments independently obtained in task b. The results support the claim that the scaled values represented the vague meanings of the terms to the individual subjects in the present experimental context. Methodological implications are discussed as are substantive issues raised by the data regarding the vague meanings of probability terms. (authors)

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Measuring the Vague Meanings of Probability Terms

: Recent years have been important changes in research in behavioral decision theory in terms of a shift from a reliance on economic and statistical models to an emphasis on concepts drawn from cognitive psychology. This report constitutes the proceedings of a conference held June 22-24, 1978, for the purpose of exploring the reasons why the changes have come about and discussing the future directions to which they point. The report contains a preface, 14 original chapters, and a reprint, each authored by various people as indicated separately for each contribution, three broad themes are woven throughout the various discussions of how cognitive limitations and processes affect choice and decision behavior. Some chapters focus on fruitful ways to enlarge the range of decision paradigms studied, others provide examples of richer psychological theories for understanding decision behavior, and a few chapters explore mathematical models in a manner to reflect cognitive rather than economic considerations.

Cognitive processes in choice and decision behavior

In order to review the empirical literature on subjective probability encoding from a psychological and psychometric perspective, it is first suggested that the usual encoding techniques can be regarded as instances of the general methods used to scale psychological variables. It is then shown that well-established concepts and theories from measurement and psychometric theory can provide a general framework for evaluating and assessing subjective probability encoding. The actual review of the literature distinguishes between studies conducted with nonexperts and with experts. In the former class, findings related to the reliability, internal consistency, and external validity of the judgments are critically discussed. The latter class reviews work relevant to some of these characteristics separately for several fields of expertise. In die final section of the paper the results from these two classes of studies are summarized and related to a view of vague subjective probabilities. Problems deserving addi...

Thomas S. Wallsten

Papers

Simultaneous Over- and Underconfidence: The Role of Error in Judgment Processes.

Measuring the Vague Meanings of Probability Terms

Cognitive processes in choice and decision behavior

State of the Art—Encoding Subjective Probabilities: A Psychological and Psychometric Review

Consistency in interpretation of probabilistic phrases