# Phil 145, Week 10

## Plan for rest of term (2003):

March 18: Making decisions. Group decisions. Russo, ch. 6, 7.

March 20. Mary Bales on real estate decisions.

March 25: Negotiation and social decisions.

March 27: Michael Webster on anchoring and fraud. Portfolio 2 due.

April 1: Improving decisions, Russo, ch. 8-10

April 3: Exam 3. In Class.

# 10a, Making choices

## Intuition

### Advantages of intuitive decision making

1. Fast, little extra effort.

2. Emotions may capture importance of criteria and alternatives.

### Disadvantages of intuitive decision making

1. Inconsistent: different gut feelings at different times. Emotions vary.

2. Information overload may lead you to pay attention to only part of what is relevant to making a good decision.

3. Intuitions may be based on inaccurate information.

## Alternatives to intuition

1. Use screening and ranking rules to eliminate alternatives

E.g. admit only graduate students with A averages

2. Rules of thumb

E.g. If a student has great letters of reference, them admit him or her.

3. Linear models: see below

4. Multiattribute utility analysis

Determine preferences then compute expected utility.

Too technical for ordinary individual decision making.

## Linear models

Franklin's method (compare Bazerman's from Week 9)

### Subjective linear models

1. List each factor (criterion, goal) based on what's importance to you.

2. Assign weights to each factor (criteria).

3. Give a numerical rating of the extent to which each factor favors each alternative.

4. Multiply the score each alternative receives on each factor by the weight assigned to each factor, then add up all the results to get an overall score for each alternative.

Bootstrapping: have experts make decisions and use statistics to infer what weights they were assigning.

### Objective linear models

Similar to subjective ones, but use data on past decisions to set weights, e.g. on what predicts students success in graduate school.

Problems

• Requires detailed data on past decisions and their results.
• Assumes that nothing important has changed.

## Recommendations

If you face a simple, unimportant decisions, use intuition or simple rules.

If you have evidence about past decisions and you think that your current decision uses the same factors, then try an objective linear model.

If you have an important decision for which there is no objective linear model, then try a subjective linear model.

## Informed Intuition

From P. Thagard, How to Make Decisions.

1. Set up the decision problem carefully. This requires identifying the goals to be accomplished by your decision and specifying the broad range of possible actions that might accomplish those goals.

2. Reflect on the importance of the different goals. Such reflection will be more emotional and intuitive than just putting a numerical weight on them, but should help you to be more aware of what you care about in the current decision situation. Identify goals whose importance may be exaggerated because of emotional distortions.

3. Examine beliefs about the extent to which various actions would facilitate the different goals. Are these beliefs based on good evidence? If not, revise them.

4. Make your intuitive judgment about the best action to perform, monitoring your emotional reaction to different options. Run your decision past other people to see if it seems reasonable to them.

## Error tendency

Shooting from the hip (Russo, ch. 6).

Tendency to make decisions intuitively based on information in your head rather than following a systematic procedure for choosing.

# 10b, Group decisions

## Groupthink: Sources of bad group decisions

1. S elf-censorship by some members who are afraid to speak up.

2. Pressure to conform with the majority.

3. Illusion of invulnerability to making mistakes.

4. Erroneous stereotyping of people outside the group.

5. Desire to conform with the group.

## How to Manage Group Decisions

• What is the group to be used for?
• Should the group participate in framing, intelligence gathering, coming to conclusions, and/or learning from feedback?

2. Encourage debate, so that diverse views are heard:

• Leaders should withhold their own views at first.
• Encourage new ideas and criticisms.
• Listen to minority views.
• Encourage reframing of the decision problem.
• Have a mixture of personalities and styles in the group.
• Discourage premature consensus.
• Maintain mutual respect.

3. Make the final choice.

• Make sure everyone's views have been heard.
• Use a systematic approach, such as a subjective linear model.
• Determine reasons for fundamental disagreements, e.g. because of different value judgments. Separate facts from values.
• If disagreements are factual, gather more information and consult experts.

## Error tendency

Group failure (Russo, ch. 7).

Tendency to assume that groups will make good choices automatically and to fail to manage the group decision-making process in ways that will produce better decisions.

Updated March 17, 2003.