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MILA MUJAADILAH

29115053

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.

HEURISTIC AND BIASES


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

The more object X is similar to class Y, the more


likely we think X belongs to Y
Anchoring

Initial estimated values affect the final estimates,


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

MILA MUJAADILAH
29115053

Salience affects retrievability


b. E.g.,
watching
a
car
accident
increases
subjective assessment of traffic accidents

2. Ease of imagination is not related to probability


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

For example, people order the potential occupations


probability and by similarity in exactly the same way

The problem is that similarity ignores multiple biases

by

BIASES ASSOCIATED WITH THE REPRESENTATIVENESS HEURISTIC


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

MILA MUJAADILAH
29115053

2. Expecting sequences of events to appear random


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

People often estimate by adjusting an initial value until a


final value is reached

MILA MUJAADILAH
29115053

Initial values might be due to the problem presentation or


due to partial computations
Adjustments are typically insufficient and are biased
towards initial values, the anchor

BIASES ASSOCIATED WITH ANCHORING AND ADJUSTMENT


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.