Judgments and Decisions Psych 253 Multi-attribute Decisions (often “riskless” decisions) Job example Introducing uncertainty to the mix.

Judgments and DecisionsPsych 253

• Multi-attribute Decisions (often “riskless” decisions)

• Job example

• Introducing uncertainty to the mix

1. Defining the problem 2. Setting goals and choosing frames3. Gathering information 4. Identifying options5. Assessing the pros and cons of the more attractive

options6. Applying the criteria for selection7. Selecting a preferred course of action8. Implementing the decision and adjusting if

necessary9. Monitoring results and revising as needed

From the trivial to the crucial

• Deciding where to go to lunch

• Deciding what summer job to take

• Deciding what career to pursue

• Deciding which medical treatment to get

• Deciding where to build a nuclear power plant

• Deciding what programs to fund

• Deciding how to jumpstart the economy

Knowing what you care about and knowing your priorities when there are multiple concerns

11. Defining the problem. Defining the problem

2. Setting goals and choosing frames

1. Identifying Objectives2. Structuring Objectives into a Hierarchy3. Specifying Attributes to Measure the Degree to

which each Objective is Achieved4. Quantifying Values for Levels of Attributes5. Combining Attributes into a Multi-Attribute Value

Function

Considering multiple reference points and multiple perspectives on the problem

Take an inside and outside view

3. Gathering information

What is the greatest danger to good information gathering?

Not insufficient time, but our own mental biases and distortions; the inability to know what we need to know.

4. Identifying options

What are the ways to treat my cancer?

Which job offers should I seriously consider?

Where could we go on a vacation?

5. Assessing the pros and cons of the more attractive options

Identify Objectives

Specify Attributes to Measure the Degree to which each Objective is Achieved

Quantify Values for Levels of Attributes

5 jobs

SalaryVacation

DaysOpp for

AdvancementCo-

Workers Location

A $50,000 2 weeks Good Good LA

B $60,000 3 weeks Great Poor LA

C $60,000 2 weeks Some Terrific NY

D $60,000 Birthday Some Ok Iowa

E $40,000 1 week Not Much Poor LA

SalaryVacation

DaysOpp for

AdvancementCo-

Workers Location

A $50,000 2 weeks Good Good LA

6 7 7 8 6

B $60,000 3 weeks Great Poor LA

10 10 10 0 6

C $60,000 2 weeks Some Terrific NY

10 7 3 10 10

D $60,000 2 days Some Ok Midwest

10 0 3 4 0

E $40,000 1 week Not Much Poor LA

0 2 0 0 6

0.50 0.05 0.20 0.10 0.15

SalaryVacation

DaysOpp for

AdvancementCo-

Workers Location

A $50,000 2 weeks Good Good LA6 7 7 8 6 6.45

B $60,000 3 weeks Great Poor LA10 10 10 0 6 8.40

C $60,000 2 weeks Some Terrific NY 10 7 3 10 10 8.45

D $60,000 2 days Some Ok Midwest 10 0 3 4 0 6.00

E $40,000 1 week Not Much Poor LA 0 2 0 0 6 1.00

0.50 0.05 0.20 0.10 0.15

SalaryVacation

DaysOpp for

AdvancementCo-

Workers Location

A $50,000 2 weeks Good Good LA6 7 7 8 7 6.60

B $60,000 3 weeks Great Poor LA10 10 10 0 7 8.55

C $60,000 2 weeks Some Terrific NY 10 7 3 10 10 8.45

D $60,000 2 days Some Ok Midwest 10 0 3 4 0 6.00

E $40,000 1 week Not Much Poor LA 0 2 0 0 7 1.15

5. Applying criteria for selection

Minimize Time?Minimize Cost?Minimize Risk?Maximize SafetyMaximize Performance?

Usually involves determining the relative importance of these variables

6. Selecting a preferred course of action

Based on sound reasoning

Based on combinations of information, beliefs, and values

7. Implementing the decision and adjusting if necessary

A commitment to following through. Might mean time, energy, resources, social embarrassment, peer pressure, risk, or uncertainty.

8. Monitoring results and revising as needed

Looking back and asking yourself, “What would I have done differently?”

Learning from experience

The Summer Job

With two job offers in hand, Sam was uncertain about what to do. One job was an assistant at a local gardening business. The job would pay $20.50 per hour, require 30 to 40 hours per week, and hours would be primarily during the week, leaving the weekends free to spend with friends. The job would last for 3 ½ months (14 weeks), but the exact number of hours was uncertain.

The second job was to work as a member of a trail maintenance crew for the Sierra Club. The job would require 10 weeks of hard work, 40 hours per week at $25 per hour, in a national forest in a neighboring state. The job would involve extensive camping and backpacking. Members of the maintenance crew would come from a large geographical area and spend the entire 10 weeks together, including weekends. Although Sam had no doubts about how much he would make, he didn’t know if he would like the people. 10 weeks together could mean anything.

What are Sam’s objectives?

• How can he measure them?

5 = Large, congenial group with many new friends. Work is enjoyable, and time passes quickly

4 = Small, congenial group. Work is interesting, and time off is spent with a few friends doing enjoyable things.

3 = No new friends. Leisure hours are spent with old friends doing typical things. Pay is fair for the work done.

2 = Work is difficult. Coworkers complain about the low pay and poor conditions. On some weekends, it is possible to spend time with a few friends, but other weekends are boring.

1 = Work is extremely difficult and conditions are poor. Time off work is boring because outside activities are limited or no one is available.

5

40 hrs

SierraClubJob

GardeningJob

3

4

2

1

.10

.25

.40

.20

.05

35 hrs

30 hrs

.15

.50

.35

Salary Fixed

Enjoyment Known

Sierra Club Job Salary = $23 per hr X 40 hrs per week X 10 weeks = $9200

Gardening Job SalaryIf 30 hrs, $20.50 X 30 hrs X14 weeks = $8,610If 35 hrs, $20.50 X 35 hrs X 14 weeks = $10,045If 40 hrs, $20.50 X 40 hrs X 14 weeks = $11,480

Expected Salary = .35 * 8610 + .50 * 10045 + .15 * 11480 = $9758

Fun SalarySierra Club 5 $9,200

4 $9,2003 $9,2002 $9,2001 $9,200

Gardening 3 $8,6103 $10,0453 $11,480

w=.4 w=.6Fun Salary

Sierra Club 100 75 85 75 75 75 50 75 65 25 75 55 0 75 45

Gardening 60 0 24 60 85 75 60 100 84

Expected utility for Sierra Club job= .10*85 + .25*75 + .40*65 + .15*55 + .10*45= 66

Expected utility for Gardening Job= .15*24 + .50*75 +. 35*84 = 70.5

Even Hamlet could have used decision analysis....

Bear whips and scorns of timeOppressor’s wrong

Proud man’s contumelyPangs pf dispriz’d love

Law’s delayInsolence of office

Spurns that patient merit of the unworthy takesBear the ills we

have

Suffer the slings and arrows of

Outrageousfortune

Take arms against a

sea of troubles

Not Dream

Dream

End the heartacheand the thousand

Natural shocks that Flesh is heir to; a

Consumption devoutlyTo be wished

Ills we know not of

To be

Not to be