Tag: Herbert Simon

Choice Under Uncertainty

Some of the general heuristics—rules of thumb—that people use in making judgments that produce biases towards classifying situations according to their representativeness, or toward judging frequencies according to the availability of examples in memory, or toward interpretations warped by the way in which a problem has been framed. These heuristics have important implications for individuals and society.

Insensitivity to Base Rates
When people are given information about the probabilities of certain events (e.g., how many lawyers and how many engineers are in a population that is being sampled), and then are given some additional information as to which of the events has occurred (which person has been sampled from the population), they tend to ignore the prior probabilities in favor of incomplete or even quite irrelevant information about the individual event. Thus, if they are told that 70 percent of the population are lawyers, and if they are then given a noncommittal description of a person (one that could equally well fit a lawyer or an engineer), half the time they will predict that the person is a lawyer and half the time that he is an engineer–even though the laws of probability dictate that the best forecast is always to predict that the person is a lawyer.

Insensitivity to Sample Size
People commonly misjudge probabilities in many other ways. Asked to estimate the probability that 60 percent or more of the babies born in a hospital during a given week are male, they ignore information about the total number of births, although it is evident that the probability of a departure of this magnitude from the expected value of 50 percent is smaller if the total number of births is larger (the standard error of a percentage varies inversely with the square root of the population size).

There are situations in which people assess the frequency of a class by the ease with which instances can be brought to mind. In one experiment, subjects heard a list of names of persons of both sexes and were later asked to judge whether there were more names of men or women on the list. In lists presented to some subjects, the men were more famous than the women; in other lists, the women were more famous than the men. For all lists, subjects judged that the sex that had the more famous personalities was the more numerous.

Framing and Loss Aversion
The way in which an uncertain possibility is presented may have a substantial effect on how people respond to it. When asked whether they would choose surgery in a hypothetical medical emergency, many more people said that they would when the chance of survival was given as 80 percent than when the chance of death was given as 20 percent.

Source: Decision Making and Problem Solving, Herbert A. Simon

Herbert Simon: Solution By Recognition and the Value of Mental Models

Herbert Simon describes the difference between experienced decision makers and novice ones in his autobiography Models of My Life.

In doing so, he highlights the value of mental models and collecting a repository of positive responses that can be called upon when needed.

One can train a man so that he has at his disposal a list or repertoire of the possible actions that could be taken under the circumstances…A person who is new at the game does not have immediately at his disposal a set of possible actions to consider, but has to construct them on the spot – a time- consuming and difficult mental task.

The decision maker of experience has at his disposal a checklist of things to watch out for before finally accepting a decision. A large part of the difference between the experienced decision maker and the novice in these situations is not any particular intangible like “judgment” or “intuition.” If one could open the lid, so to speak, and see what was in the head of the experienced decision-maker, one would find that he had at his disposal repertoires of possible actions; that he had checklists of things to think about before he acted; and that he had mechanisms in his mind to evoke these, and bring these to his conscious attention when the situations for decisions arose.

Most of what we do is to get people ready to act in situations of encounter consists of drilling in these lists into them sufficiently deeply so that they will be evoked quickly at the time of the decision.