Question

Check your understanding of heuristics and tendencies in decision making by trying to identify the quirks in reasoning apparent in the following examples. Write the letter for the cognitive phenomenon at work in the space on the left, choosing from the following: (a) the availability heuristic, (b) the representativeness heuristic, (c) the tendency to ignore base rates, and (d) the conjunction fallacy. You can find the answers in Appendix A. __________ Maurice and Whitney are the proud parents of four girls, but they still yearn for a baby boy. In contemplating whether to try to have another child in the hopes of adding a boy to the family, they figure, "What the heck, the laws of probability are in our favor. The probability of having five girls in a row has to be pretty low. Let's go for it."

Short answer

Answer: (c) The tendency to ignore base rates

Step-by-step solution

Understand the biases

Before we answer, let's briefly understand the four biases: (a) Availability heuristic - People tend to judge the likelihood of an event based on how easily they can think of examples. (b) Representativeness heuristic - Individuals tend to judge the probability of an event by finding a similar event and assuming that the probabilities will be similar. (c) Tendency to ignore base rates - People tend to ignore the background information or base rates while making a judgment. (d) Conjunction fallacy - When people incorrectly assume that the probability of a specific event is higher than the combined probabilities of separate events.

Analyze the example

In the given example, Maurice and Whitney are making a decision based on their belief that the probability of having five girls in a row is low, so they think the next child is more likely to be a boy. However, the probability of having a boy or a girl in each pregnancy is actually independent of previous outcomes. They are ignoring that the base rate of having a boy or a girl is approximately 50%, regardless of the previous births in their family.

Identify the bias

Since Maurice and Whitney are ignoring the base rate (50% chance of having a boy or a girl) and are influenced by their previous experience of having four girls, the best fitting cognitive bias in this example is: Answer: (c) The tendency to ignore base rates

Key concepts

Availability Heuristic

The availability heuristic is a mental shortcut that helps people make decisions based on how easily examples come to mind. If you can recall specific instances of an event quickly, you are likely to overestimate their likelihood.

For example, if you frequently hear about plane crashes on the news, you might think they are more common than they are. The reason is simple. Plane crashes make the news precisely because they are rare, but constant reports can make them seem more frequent.

This heuristic is helpful in everyday decisions but can sometimes lead to incorrect assumptions, especially when the most memorable events are not representative. Being aware of this bias can help people make more informed decisions by considering actual statistics rather than just memorable stories.

Representativeness Heuristic

The representativeness heuristic involves assessing the similarity between a current situation and a familiar one and drawing conclusions based on that resemblance. This often leads people to ignore factual probabilities, instead relying on stereotypes or patterns they recognize.

For instance, if you meet someone who is quiet and wears glasses, you might quickly assume they are a librarian, based on the classic stereotype, even though there are many professions they could belong to.

While this heuristic aids quick decision-making, it can result in poor judgments when the stereotypical characteristics do not reflect reality. To counteract this tendency, it’s helpful to focus on statistical data or broader context, rather than surface similarities.

Base Rate Fallacy

The base rate fallacy occurs when people ignore fundamental statistical probabilities (base rates) in favor of specific information or recent events. This can lead to flawed decision-making because the overlooked base rates provide a broader context that's crucial for accurate judgements.

Imagine someone is flipping a coin. After several heads in a row, they might believe the next flip is more likely to be tails. However, each flip is independent, with a consistent base rate probability of 50% for heads or tails each time.

To avoid the base rate fallacy, always consider the general information or statistics relevant to the decision at hand. Look beyond attention-catching specifics that might cloud judgment.

Conjunction Fallacy

The conjunction fallacy involves mistakenly assuming that the probability of a combination of two events is higher than the likelihood of either event occurring alone. This error occurs because people often find complex scenarios more plausible or detailed.

An example of this fallacy could be concluding that a person is more likely to be a bank teller who is also politically active, than just a bank teller. Even though having two simultaneous conditions might seem more compelling, the laws of probability state this isn't true; it's less likely to satisfy two conditions together than just one.

Recognizing the conjunction fallacy requires understanding that adding details to a scenario always decreases its likelihood. Keeping this in mind can guide more accurate and logical reasoning.