Judgment And Decision-Making Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

Judgments refer to external evaluations of the world, regarding the probability, likelihood, or frequency of events occurring. Judgments often happen under conditions of uncertainty. Decisions involve internal trade-offs of values and often take place under conditions of risk. Judgments can be systematically and predictably influenced by heuristics, which represent basic rules of thumb, helping to reduce the time and effort required to render good judgments. Most of the psychological research on judgment and decision making has been conducted by Daniel Kahneman and Amos Tversky; their work has proven widely influential in a variety of disciplines, and Kahneman won the Nobel Prize in Economics for this work in 2004.

The three most important judgmental heuristics are representativeness, availability, and anchoring and adjustment. Representativeness refers to the way in which people judge the probability that one object, person, or event belongs to a particular category based on similarity. This tendency leads people to underutilize the base rate, or prior probability. This results in three specific biases. First, the conjunctive fallacy occurs when individuals judge scenarios that encompass specific details to be more likely because they appear more representative. This makes decision makers overestimate certain probabilities, leading to unwarranted optimism in planning. Second, people tend to believe in the law of small numbers, assuming that chance processes correct themselves in short strings, as when one expects tails to follow heads quickly on the toss of a fair coin. Last, people often engage in nonregressive prediction, failing to understand that many outcomes return to the mean regardless of intervention. The representativeness heuristic encourages the sometimes inappropriate use of historical analogies when decision makers use obvious similarities between cases to draw implications and instructions on how to act based on past experience, often without full recognition of the important ways in which the events may differ.

Availability encourages individuals to judge frequency according to associations that are triggered in memory or imagination. The strength of these associations then serve as the basis for judgments of frequency. Problems arise because such associations derive from many factors, such as vividness, salience, and primacy and regency effects, which do not strongly correlate with actual probability. Availability contributes to worst and best case scenario planning, as plausibility and ease determine judgments of likelihood.

Anchoring and adjustment biases predictions toward initial values, or anchors, which are then often insufficiently adjusted to current circumstances. This leads to the disjunctive effect, whereby people underestimate certain probabilities. This can prove important in planning and failure analysis.

Decisions are then made on the basis of these judgments. Prospect theory offers a psychological model of decision making under conditions of risk. It encompasses two phases: editing and evaluation. Editing, or framing effects, constructs options for choice. The order or method of presentation can decisively affect substantive choice. Evaluation includes two functions, value and weighting. The value function evaluates relative change from an individual’s reference point, typically represented by the status quo. People tend to be risk averse in a domain of gains and risk-seeking in a domain of loss. Loss aversion establishes that losses hurt more than equal gains please. The weighting function evaluates psychological significance. Certain or impossible events carry more weight. Further, low probability events are overweighed, while moderate and high probability events are underweighted.

Bibliography:

Jervis, Robert. “Representativeness in Foreign Policy Judgments.” Political Psychology 7, no. 3 (1986): 483–505.
Kahneman, Daniel, Paul Slovic, and Amos Tversky. Judgment under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press. 1982.
Kahneman, Daniel, and Amos Tversky. “Prospect Theory: An Analysis of Decision under Risk.” Econometrica 47, no. 2 (1979): 263–291.
McDermott, Rose. Risk Taking in International Relations: Prospect Theory in American Foreign Policy. Ann Arbor: University of Michigan Press, 1998.

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