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Thinking and Decision Making Psychology 2235 Prof. Elke Weber Segment 2 Descriptive Models Thinking and Decision Making Psychology 2235 Prof. Elke Weber Segment 2 Descriptive Models

Descriptive Models of Choice I. Decision Making as Constrained Optimization A. B. II. Existences Descriptive Models of Choice I. Decision Making as Constrained Optimization A. B. II. Existences and Role of Constraints in Optimization Problems Implementation of Decision Processes as a Constraint We, the Decision Makers A. Homo Sapiens as a Constraint and Opportunity III. How do we utilize our strengths and cope with our limitations? A. B. C. D. Simple judgment tasks (e. g. , frequency or likelihood judgments) Complex judgment tasks (e. g. , impression formation) Riskless choice tasks (e. g. , what car to buy) Risky choice tasks (e. g. , whether to get life insurance)

Role of Constraints in Optimization • Operations Research: Decision Making = Objective Function (to Role of Constraints in Optimization • Operations Research: Decision Making = Objective Function (to be optimized) + Constraints • Power of Concept of Optimization - guiding principle that provides predictions and solutions in economics (maximization of expected utility) and biology (maximization of inclusive fitness) Example 1: Assigning incoming aircrafts to gates Example 2: How to choose the best three out of 600 applicants for an academic program

 • • We, the Decision Maker: Constraints and Opportunities Sensation and Perception Attention • • We, the Decision Maker: Constraints and Opportunities Sensation and Perception Attention Memory —————| needed to produce probable Imagination/Creativity ———| outcomes and imagine what they will feel like • • • Emotions Learning Categorization Logical Reasoning Computation —> needed for cost-benefit calculations Needs/Motivation —> Goals —> Utility

Herb Simon (1983) Three visions of rational choice • Olympian Model heroic (wo)man making Herb Simon (1983) Three visions of rational choice • Olympian Model heroic (wo)man making comprehensive choices in an integrated universe • Behavioral Model organisms with limited computational abilities making adaptive choices in a complex, but mostly ‘empty’ universe • Intuitive Model organisms using recognition processes that capitalize on stored experiences and using emotions to focus (limited) attention

Satisficing (Herb Simon) Definition: Choosing the first alternative that is good enough (as opposed Satisficing (Herb Simon) Definition: Choosing the first alternative that is good enough (as opposed to choosing the BEST alternative). - A sufficiency criterion rather than an optimality one. Why Satisfice? - Because the cost in time, effort, and demand on your analytical capabilities may be too high to do otherwise. Examples: • Investment • Job hunting • Consumer purchases

Two Processing Systems • Epstein (1994) and Sloman (1996) rational system and emotionally-driven experiential Two Processing Systems • Epstein (1994) and Sloman (1996) rational system and emotionally-driven experiential system different systems use different processes and representations (and thus are differentially activated by different types of stimuli and information) two models of mental representation (Bruner, 1986): - propositional thought: logical, formal, abstract - narrative thought: imagistic, concrete, specific, emotional