- Paperback: 302 pages
- Publisher: McGraw-Hill; 1st edition (1993)
- Language: English
- ISBN-10: 0070504776
- ISBN-13: 978-0070504776
- Product Dimensions: 6.3 x 0.5 x 9.1 inches
- Shipping Weight: 12.8 ounces (View shipping rates and policies)
- Average Customer Review: 39 customer reviews
- Amazon Best Sellers Rank: #59,472 in Books (See Top 100 in Books)
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The Psychology of Judgment and Decision Making (McGraw-Hill Series in Social Psychology) 1st Edition
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Apparently we tend to "satisfice" not "optimize", which for me is obvious (second hindsight bias) and I will try to explain why: In several of the examples, in order to "maximize" value, you need to multiply one probability with one or several others to obtain the "combined probability result" of two or more events happening one after the other. In other problems, you need to add up the individual probabilities in order to obtain the probability of one or the other event happening. Assuming that you knew how to state the problem in terms of probabilities and the rules to calculate them, you would still need to actually perform the calculations (consciously or unconsciously) in order to take a decision. Many decisions need to be taken quickly and even if there is enough time, I do not think people usually do these calculations, so they probably rely on some sort of intuition (what the author calls heuristics or rules of thumb). These rules of thumb will depend on past experiences specially on those that are easily accesible to memory because they were frequent or recent or because they had a great emotional impact on us (positive or negative). If to "maximize value" we need to perform complex calculations, then I am sure we do not "maximize", we rather settle with a fairly good decision. Further, if we need to "maximize value" in order to be considered rational, then we are probably not rational.
It would have been interesting to know how people decide when previously given the calculated expected values of each choice (considering the probabilities). I think that "rationality" would increase a bit, but not significantly, since some people believe they can "outperform" the odds (by special luck), while others try to avoid undesirable risks, even if the probabilities are very low (specially if the impact of the risk is big).
The book explains thoroughly how we deviate from what would be "rational" decision making. Each of the 20 chapters presents research that exemplifies one or more biases like inconsistency, perception and memory biases, framing, intransitivity, neglecting base rates, attribution errors, social loafing, sunk costs and behavioral traps. It makes quite clear that we do not decide in a "rational" way, but it does not explain the actual process we use to make decisions. Additionally, the author shows that we are not good at probability and statistical analysis, but he does not explain the calculations we should have done were we "rational decision makers". (He could have included it in an Appendix). If you already know this kind of math or if you are not interested, then the book can be read without it. After reading this book I tried some books on probability and randomness The Drunkard's Walk: How Randomness Rules Our Lives (Vintage) narrates the history of probability theory and explains it in a general manner with day to day examples that are quite interesting and Taking Chances: Winning with Probability inlcudes more examples and requires you to take paper and pencil to do the math. Finally and although the book is very interesting and full of insights, I need to say that I am glad that I bought a used one, since its price seems not too rational to me either.
I am very interested in the popular psycology stuffs, and Influence by Cialdini is my fav. So this book in some way give you the same chockful of surprises and new insight that will change the way you think.
I came across recomended by a University of Chicago MBA -email friend- who has much similar books favourites and he recomended this highly, and i absolutely agree and i would be glad to recommend this to anyone interested in human behaviour and psychology of bias.
MBA students should read this one and surely will enjoy this. I always draw, marks and put notes on my book and i think i end up marking so much of the materials.
Section one: Perception, Memory and Context
Section two: How Questions affect answers
Section three: Model of Decision making
Section Four: Heurictis and Biases.
Section five: The Social side of judgment and decision making
Section six: Common traps.
Some will complain that this book derived from a lot of previous psychological research, i agree, so for the psychology veteran out there, this might not the right book for you, but for most of us, this book will enlight, entertain and amuse us all...
Read and you will find a few things in there that will give you a light bulb moment.
Not a real easy read but worth spending time with.
It has a quiz on the first pages, so that you can see how your thinking is improving just from reading it.
Even if you don't need to study this subject, its a great book just to get better at negotiating, making decisions and at LIFE!
Its a great buy.