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Decision making under uncertainty

This lecture explains how uncertainty influences our decision making
In this activity, we’re going to be looking at how complexity and uncertainty in our environment affect decision making. Within decision making, I’m including cognition, so the way that we think, and judgement , making judgments about the world around us. Today’s session specifically, today’s lecture, is going to focus first and foremost on uncertainty in our environment. Our goal as human beings is to survive. We want to pass on our genetic material to the next generation, and uncertainty implies potential danger in our environment. So in the past, if we heard a noise and we didn’t know what it meant, it could be a tribe coming to kill us or a woolly mammoth coming to trample on us.
But we also have uncertainty in the modern world. So certainly, the instability in our economic environment implies a certain uncertainty. We don’t know, for example, what our retirement fund is going to be worth in 20 years. Thus, this is uncertainty. It signals danger in our environment. And when we’re in a dangerous situation, there are two things that serve us best on average. The first is to make quick judgments based on what is correct most of the time, that is, to rely on habitual behaviour or habits. The second is to look to the outside world for cues on how to think and act, that is, to ask yourself, what are other people doing in this situation?
I’m going to talk about today three effects of uncertainty for human decision making. First of all, I’m going to talk about reverting to or relying on habitual behaviour, on habits. Second, I’m going to talk about engaging in the confirmation bias. I’ll tell you what that is in a bit. And the third is relying on social norms. So when we’re facing uncertainty in our environment, it leads us to act in ways that are comfortable to us, that are habitual. Individuals don’t like change or novelty. I’m a psychologist. I can tell you that change or novelty is one of the things that human beings dislike the most.
Actually, change or novelty, uncertainty, are both considered stressors to the human body, and stress, which is oftentimes triggered by uncertainty, increases unhealthy behaviours, habitual behaviours, things like alcohol intake, unhealthy eating, smoking. The second thing that uncertainty tends to do is to lead us to engage in the confirmation bias, and I’ll define what the confirmation bias is. The confirmation bias is the tendency to search for information that confirms our existing perceptions of the world, to search for information that confirms the way we already think about the world. This was very eloquently demonstrated by a psychologist named P. C. Watson, and he did a little experiment with his participants which I’m going to do with you right now.
So I’m going to propose to you three numbers, two, four, six, and those three numbers represent a pattern that I have in my head, that I know but you don’t know. And I’m going to allow you to propose three numbers back to me, and I will tell you if those numbers either confirm the pattern I have in my head or disconfirm the pattern. So take a few seconds right now at home to think about three numbers that you’re going to propose to me that you think might tell you the pattern that I have in my head represented by two, four, and six. So take a few seconds to think about those numbers. Do you have them?
Well, I’m going to assume the numbers you’re going to propose to me are going to look something like 12, 14, or 16, maybe 30, 32, 34. How do I know that? Well, I assumed that as soon as I said to you two, four, six, you thought that the pattern in my head was consecutive ascending even numbers, and so in response, you’re going to propose to me consecutive ascending even numbers, numbers that confirm your way of viewing the world, your confirmation bias.
However, an alternative strategy would be to propose numbers that actually disconfirm your hypothesis but also stay in line with two, four, and six, perhaps numbers like 22, to 24, and 66, numbers that contain two, four, six, or one, three, and five, any numbers that differ by two in increasing fashion. Might you have been surprised that actually the pattern in my head was any numbers that are increasing? So one, two, three could have confirmed the pattern. But instead of picking numbers that disconfirm your strategy of the world, you picked numbers that confirmed them, and you were pretty unlikely to find my pattern based on that strategy. It was a faulty strategy.
So the third thing that I’m going to talk about, the third effect of uncertainty in our environment, is reliance on social norms, the tendency to look to the outside world for cues on how to think and act. And we’re more likely to do this in uncertain situations. We’re more likely to look around us to see what others are doing. A great study by Goldstein and Cialdini demonstrated this. So they wanted to increase people’s recycling behaviour in hotels, so the recycling behaviour, for example, of their hotel towels. So what they did is they went into a hotel and they randomly assigned various rooms to receive one of three conditions.
In one condition, next to the hotel towel rack, hotel guests saw the classic sign we always see in hotels. Please recycle your towels. It helps to save water and to conserve the environment. So one third of hotel guests saw this classic message. Another third saw the same classic message, please recycle your towels. It helps to save water, conserve the environment. 75% of hotel guests recycle their towels. So in addition to this classic message, Cialdini and Goldstein also presented to hotel guests what other people were doing. 75% of hotel guests recycle their towels. And in the third condition, people again saw the classic message, please recycle your towel. It helps to save the environment.
But in addition to that, they saw the message, 75% of hotel guests in this room recycle their towels, and they actually put the room number on the sign. Cialdini and Goldstein found that descriptive norms, that is, what other people do, led to more recycling than what they called proscriptive norms, what you should do. So saying 75% of hotel guests recycle their towels led to more recycling than merely saying, please recycle your towels. It helps save the environment, what you should do. But the most effective message was what Cialdini and Goldstein called provincial norms, saying what other people do in your exact situation. 75% of hotel guests in this room recycle their towels.
That led to about 50% of recycling versus about 35% in the mere please recycle your towels, and 45% in the descriptive norm, 75% of people in general recycle their towels.
So in today’s lecture, I talked about how uncertainty affects decision making. I talked about people tendency to look to the outside world for cues are how to think and act, engaging in the confirmation bias, and reliance on habitual behaviour. In the next lecture, I’m going to be focusing on complexity in the environment with a special spotlight on complexity and stereotyping.
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Decision Making in a Complex and Uncertain World

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