Sunday, November 8, 2009

Women Drivers and Balls, Part 3 of Cognitive Biases

In the third installment of my series on cognitive biases, we’ll examine four more today: the ambiguity aversion effect, choice-supportive bias, the distinction bias, and the contrast effect. Oh — and the title illustrates one more: illusory correlation, connecting things simply because they're proximate.

Last week’s installment can be found here, and the series begins here.

Ambiguity aversion effect. Daniel Ellsberg, best known for releasing the Pentagon Papers in 1971, is also known for the 1962 discovery of the Ellsberg paradox, in which people make decisions not because they are best, but because they seem less ambiguous.

In the Ellsberg paradox experiment, you have an urn with 30 red balls and 60 other balls that are either black or yellow. You don’t know the ratio of black to yellow, only that the total of black and yellow is 60. You can make the following wagers:
  • Gamble A: You get $100 if you draw a red ball
  • Gamble B: You get $100 if you draw a black ball.
You can also choose either of the following wagers (for another draw):
  • Gamble C: You get $100 if you draw a red or a yellow ball
  • Gamble D: You get $100 if you draw a black or yellow ball.
If you prefer Gamble A to Gamble B, it’s rational you should prefer Gamble C to Gamble D — the number of yellow balls is the same. If you prefer Gamble B to Gamble A, by similar logic you should prefer Gamble D to Gamble C.

But in actual surveys, most people strictly prefer Gamble A to Gamble B, and Gamble D to Gamble C. The logic that informs one decision breaks down for the other.

The idea of the ambiguity effect is that people prefer known risks over unknown risks, regardless of other factors. Choosing Gamble A over Gamble B is a preference for knowing the number of red balls, even though the number of black balls might be greater. Choosing Gamble D over Gamble C is a preference for knowing that the sum of black and yellow balls is 60, even if the sum of red and yellow might be greater.

Choice-supportive bias. On a business trip to St. Thomas many years ago, the cab driver taking me back to the airport suddenly honked his horn at a car trying to pull out into traffic.

“Women drivers!” he said in disgust.

I looked over at the offending car. “Looks like the driver is male,” I observed.

“Yeah, well, he drives like a woman,” the cabbie replied.

Choice-supportive bias is the tendency to remember your choices as better than they are, to look for information that supports them, and reject information that does not. In the case of the St. Thomas cab driver, he’s decided that women are bad drivers. Any time he sees a woman driving badly, he notices. When it’s a man, he doesn’t notice it’s a man, or forgets about it as an anomaly (“Drives like a woman.”)

This man doesn’t think of himself as prejudiced, because he thinks the observed facts confirm his opinion. What he fails to see is that the key word is “observed.” He’s blind to any facts that would challenge his opinion.

Choice-supportive bias is related to confirmation bias, the tendency to search for or interpret information to confirm one’s own perceptions, and thus to experimenter’s bias, covered last week.

To fight choice-supportive bias in yourself, be skeptical of general beliefs you hold about people, groups, or the nature of life. There’s probably important stuff you’re overlooking.

Distinction bias. In sales, it’s well known that if you present the customer with the higher-priced option first, the customer will be happier with his or her final decision, regardless of which choice he or she finally makes.

The distinction bias is the observed difference between how people evaluate options side-by-side and how people evaluate the same options when presented separately. If you look at two 52” HDTV sets side by side, any quality difference between them looms large indeed, and paying the money for the “better” one seems sensible.

But if you evaluate the sets separately, you may not notice any material quality difference at all. If so, and if both sets are good enough, you’re more likely to buy the cheaper one. So before buying a big ticket item, make sure you evaluate your options separately. You may make a very different decision.

Contrast effect. The contrast effect changes your normal perception as a result of exposure to a stimulus in the same dimension. A number of optical illusions work by exploiting the contrast effect.

File:Simultaneous Contrast.svg
In the first image, the two inner rectangles are the same shade of gray, but the top one looks lighter because of the contrast with the background.

File:Successive contrast.svg

In the second image, stare at the center dot in one of the top row disks for a few seconds, then look at the center dot in the disk immediately below. The two lower disks will appear to have different colors for a few seconds.

In interpersonal relationships, the contrast effect means that we judge the current state of the relationship by its contrast to an earlier state. If someone has been enormously attentive and is now less so (even if much more so than the average person), this is perceived negatively. If someone’s been cold or distant and warms up even slightly (but less so than the first person), that’s perceived positively.

More after these messages from the Samaritan Medal Foundation.

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