How We Decide, by Jonah Lehrer

How We Decide, by Jonah Lehrer

• How We Decide, by Jonah Lehrer

• Thinking Fast and Slow, by Danny Kahneman

• Nudge, by Cass Sunstein and Richard Thaler

2002 Nobel Laureate in Economics

• 2002 Nobel Laureate in Economics

• Like William James, believes we have 2 mental ‘systems’:

• System 1, for near-instinctual decisions;
• System 2, for higher logic.

• We make most decisions based on emotion, but even the rational parts:

• Depend on our mood;
• Are often flawed,
• No matter how smart we are.

Seeing frequent advertising leads to a more favorable opinion of the product.

• Seeing frequent advertising leads to a more favorable opinion of the product.

• We need simplicity, so we jump to false (but consistent) conclusions.

• “People, including scientists, often search for information that confirms their own beliefs.”

Before implementing, revisit a decision on another day or another part of the day, to correct for mood changes.

• Before implementing, revisit a decision on another day or another part of the day, to correct for mood changes.

• Devise your own ad hoc strategies: DK let students’ answers to Q1 influence his grading of Q2. Now he grades all Q1s before going back to grade all students’ Q2s, etc.

Consider choosing a restaurant to take guests to dinner.

• Consider choosing a restaurant to take guests to dinner.

• What parts of the decision making process are rational? What parts are emotional?

• How would your answer change if it were a very important decision, for example, for your wedding or your daughter’s wedding?

Organizationally, or for policy

• Organizationally, or for policy

• To explain - or justify! - a decision

• Psychologically

• Loss aversion
• Random events
• Discounting

Doctors are asked to choose, in 2 trials:

• Doctors are asked to choose, in 2 trials:

• 1st trial: Alternative A is “60% chance of saving patient.”
• 2nd trial: The same alternative is called “40% chance patient dies.”
• More doctors choose alternative A in Trial 1 than in Trial 2, even tho choices are identical.

• We hate losing more than we want winning.

• People with brain lesions that inhibit emotion do not display loss aversion behavior. “Normal” people do, consistently.

The emotional brain looks for patterns.

• The emotional brain looks for patterns.

• Casino games are random (except that e.g. slot machines pay 10% to the house). That is, no pattern.

• Thus, emotional brain does not want to stop playing.

• People with brain lesions inhibiting rational thought easily become addicted to gambling.

... values short-term payoff more than we value a greater long-term benefit.

• ... values short-term payoff more than we value a greater long-term benefit.

• ... is more concerned with our own neighborhood than with events in distant countries.

• ... cares more for what happens to individuals than to what happens to masses.

• Example: Genocide & starvation in South Sudan vs. abuse of one child in Oprah Winfrey’s school (2010).

How can we balance the effects of emotion vs. rationality?

• How can we balance the effects of emotion vs. rationality?

• The answer is self-examination.

• We can be aware of our own emotions.
• Ask, “Why do I feel this way?”

• Thus, Kozmetsky and Kahneman gave us good advice for evaluating our decisions.

Other parts of the brain can do only one thing.

• Other parts of the brain can do only one thing.

• But the PFC is versatile,

• “does whatever you program it to do.”
• has connections to all other parts of the brain.

• Beware of fMRI results, though

• Attempts to tie specific brain activity to specific behaviors are not yet reliable.

Placebo effect

• Placebo effect

• Distraction

• Tiredness

• Susceptibility to logical fallacies

• Stress

A veteran firefighter saved his own life by setting a fire around himself before he was engulfed by oncoming firestorm.

• A veteran firefighter saved his own life by setting a fire around himself before he was engulfed by oncoming firestorm.

• An airline pilot saved passengers’ lives by figuring out how to fly without hydraulics.

• Their strategies had never been tried before!!

• The strategies are now part of regular training.

• They were rational, creative strategies.

• How did these men do it?

They felt fear.

• They felt fear.

• They understood fear would not save them.

• They over-rode the fear and allowed the creative mind to engage.

Experience

• Experience

• Wisdom

• Speed in exhausting all possibilities of one mode, realizing the only possible answer is the other mode.

Experience

• Experience

• Wisdom

• Speed in exhausting all possibilities of one mode, realizing the only possible answer is the other mode.

Emotion can over-ride rationality.

• Emotion can over-ride rationality.

• Rationality can over-ride emotion.

• This is “executive control.”

• Have you experienced this? In what circumstances?

• GROUP DISCUSSION

A person is facing rape, or is taken hostage.

• A person is facing rape, or is taken hostage.

Proving this won Kahneman the Nobel Prize.

• Proving this won Kahneman the Nobel Prize.

• We have discussed some of these biases (loss aversion, etc.).

• It may be possible to “nudge” people to better decisions by presenting choices in different ways.

Denmark: Green footprints leading to bins decrease littering; green prints leading to stairs, people still use escalator

• Denmark: Green footprints leading to bins decrease littering; green prints leading to stairs, people still use escalator

• USA: Telling people how much electricity their neighbors use decreases energy consumption.

• This does not work in France.

Realistic policies that recognize how people really behave

• Realistic policies that recognize how people really behave

• Also big potential for unethical manipulation of people.

• See economist.com/nudge12

• Have you nudged or been nudged? DISCUSSION

http://www.youtube.com/watch?v=vhToKaPwKE4

• http://www.youtube.com/watch?v=vhToKaPwKE4

• http://www.youtube.com/watch?v=E3aE3SpT-BU&feature=channel

• http://www.youtube.com/watch?v=ZQ7uYel4qqk