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RESUME CHAPTER 9

BIASES IN PROBABILITY ASSESSMENT

Many decisions arebasedonbeliefs concerningthelikelihoodof

uncertaineventssuchastheoutcomeofanelection,theguiltofa

defendant.Thesebeliefs are usuallyexpressed instatementssuch

as"Ithinkthat...,""chancesare ...,""itisunlikelythat

. . . ," and so forth. This raises the question, how good are

peopleatestimatingprobabilities?Overthepast30yearsorso,

thisquestionhasbeenthesubjectofagreatdealofresearchby

psychologistsandinthischapterwewilllookattheresultsof

theirwork.

Based on the work from of Tversky and Kahneman1 who

published their ideas in a series of well-written and accessible

papers starting in the early 1970s Much of the research on the

quality of human judgment of probability has stemmed. The central

theme of Tversky and Kahnemans work is that people use rules of

thumb or heuristics to cope with the complexities of making

estimates of probabilities.

Three main heuristics identified by Tversky and Kahneman are

Availability

The easier it is to consider instances of class Y, the

more frequent we think it is

Representativeness

likely we think X belongs to Y

Anchoring

even after considerable adjustments

AVAILABILITY HEURISTIC

The frequency of a class or event is often assessed by

the ease with which instances of it can be brought to

mind

The problem is that this mental availability might be

affected by factors other than the frequency of the class

or event

BIASES ASSOCIATED WITH THE AVAILABILITY HEURISTIC

1. When ease of recall is not associated with probability

Classes whose instances are more easily retrievable

will seem larger

a. For example, judging if a list of names had more

men or women depends on the relative frequency of

famous names

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b. E.g.,

watching

a

car

accident

increases

subjective assessment of traffic accidents

Instances often need to be constructed on the fly using

some rule; the difficulty of imagining instances is used

as an estimate of their frequency

a. E.g. number of combinations of 8 out of 10 people,

versus 2 out of 10 people

b. Imaginability

might

cause

overestimation

of

likelihood of vivid scenarios, and underestimation

of the likelihood of difficult-to-imagine ones

3. Illusory Correlation

People

tended

to

overestimate

co-occurrence

of

diagnoses such as paranoia or suspiciousness with

features in persons drawn by hypothetical mental

patients, such as peculiar eyes.

Subjects might overestimate the correlation due to

easier association of suspicion with the eyes than

other body parts.

REPRESENTATIVENESS HEURISTIC

We often judge whether object X belongs to class Y by how

representative X is of class Y

probability and by similarity in exactly the same way

by

1. Ignoring base-rate frequencies

The base rate of outcomes should be a major factor in

estimating their frequency.

However, people often ignore it (e.g., there are more

farmers than librarians)

a. E.g., the lawyers vs. engineers experiment:

i. Reversing the proportions (0.7, 0.3) in the group

had

no

effect

on

estimating

a

persons

profession, given a description

ii. Giving worthless evidence caused the subjects to

ignore the odds and estimate the probability as

0.5

b. Thus, prior probabilities of diseases are often

ignored when the patient seems to fit a rare-disease

description

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29115053

People expect random sequences to be representatively

random even locally

a. E.g., they consider a coin-toss run of HTHTTH to be

more likely than HHHTTT or HHHHTH

The Gamblers Fallacy

b. After a run of reds in a roulette, black will make the

overall run more representative

Even experienced research psychologists believe in a law

of small numbers (small samples are representative of the

population they are drawn from)

3. Expecting chance to be self-correcting

People predict future performance mainly by similarity of

description to future results

For example, predicting future performance as a teacher

based on a single practice lesson

a. Evaluation percentiles (of the quality of the lesson)

were identical to predicted percentiles of 5-year

future standings as teachers

4. Ignoring regression to the mean

People tend to ignore the phenomenon of regression

towards the mean

a. E.g., correlation between parents and childrens

heights or IQ; performance on successive tests

People expect predicted outcomes to be as representative

of the input as possible

Failure to understand regression may lead to overestimate

the effects of punishments and underestimate the effects

of reward on future performance (since a good performance

is likely to be followed by a worse one and vice versa)

5. The conjunction fallacy

A good match between input information and output

classification or outcome often leads to unwarranted

confidence in the prediction

Example: Use of clinical interviews for selection

Internal

consistency

of

input

pattern

increases

confidence

a. a series of Bs seems more predictive of a final

grade-point average than a set of As and Cs

b. Redundant, correlated data increases confidence

THE ANCHORING AND ADJUSTMENT HEURISTIC

final value is reached

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due to partial computations

Adjustments are typically insufficient and are biased

towards initial values, the anchor

1. Insufficient adjustment

Anchoring occurs even when initial estimates (e.g.,

percentage of African nations in the UN) were

explicitly made at random by spinning a wheel!

Anchoring may occur due to incomplete calculation,

such as estimating by two high-school student groups

a. the expression

8x7x6x5x4x3x2x1 (median answer:

512)

b. with the expression 1x2x3x4x5x6x7x8 (median answer:

2250)

Anchoring

occurs

even

with

outrageously

extreme

anchors (Quattrone et al., 1984)

Anchoring

occurs

even

when

experts

(real-estate

agents) estimate real-estate prices (Northcraft and

Neale, 1987)

2. Overestimating

the

probability

of

conjunctive

&

disjunctive events

People tend to overestimate the probability of

conjunctive events (e.g., success of a plan that

requires success of multiple steps)

People underestimate the probability of disjunctive

events (e.g. the Birthday Paradox)

In both cases there is insufficient adjustment from

the probability of an individual event

3. Overconfidence

Estimating the 1st and 99th percentiles often leads to

too-narrow confidence intervals

a. Estimates often start from median (50th percentile)

values, and adjustment is insufficient

The degree of calibration depends on the elicitation

procedure

b. state values given percentile: leads to extreme

estimates

c. state

percentile

given

a

value:

leads

to

conservativeness

All heuristics are quite effective, usually, but lead to

predictable, systematic errors and biases. Understanding biases

might decrease their effect.

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