ERRORS OF JUDGMENT AND CHOICE

                         ERRORS OF JUDGMENT AND CHOICE 

HEURISTIC : adj. ; Enabling a person to discover or learn something for themselves. 

BIAS : noun ; Prejudice in favor of or against a thing, person, or group compared with another. 

   An individual has been described by a neighbor as follows : "Steve is very shy and withdrawn, invariably helpful but with little interest in people or in the world of reality. A meek and tidy soul, he has a need for order and structure, and a passion for detail."  Is Steve likely to be a librarian or a farmer ? 

   The resemblance of Steve's personality to that of a stereotypical librarian strikes everyone immediately, but equally relevant statistical considerations are almost always ignored. Did it occur to you that there are more than 20 male farmers for each male librarian in the United States ? Because there are so many more farmers, it is almost certain that more "meek and tidy" souls will be found on tractors than at library information desks. However, most people who were  questioned ignored the relevant statistical facts and relied exclusively on resemblance. They used as a simplifying heuristic [ sort of like "rule of thumb" ] to make a difficult judgment. The reliance on the heuristic caused predictable biases [ systematic errors] in their predictions. 

   Many decisions are based on beliefs concerning the likelihood of uncertain events such the outcome of an election, the guilt of a defendant, or the future of the dollar. These beliefs are usually expressed in statements such as "I think that. . .," "it is unlikely that. . .," and so forth. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. What determines such beliefs ?  How do  people assess the probability of an uncertain event or the value of an uncertain quantity ? Scientific experiments show that people rely on a limited number of heuristic principles which reduce the complex tasks of assessing probabilities and predicting values to simpler judgmental operations. In general, these heuristics are quite useful, but sometimes they lead to severe and systematic errors. 

   The subjective assessment of probability resembles the subjective assessment of physical qualities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. For example, the apparent distance of an object is determined by its clarity. The more sharply the object is seen, the closer it appears to be. This rule has some validity, because in any given scene the more distant objects are seen less sharply than nearer objects. However, the reliance on this rule leads to systematic errors in the estimation of distance. Specifically, distances are often overestimated when visibility is poor because the contours of objects are blurrred. On the other hand, distances are often underestimated when visibility is good because the objects are seen sharply. Thus, the reliance on clarity as an indication of distance leads to common biases. Such biases are also found in the intuitive judgment of probability. This missive describes three heuristics that are employed to assess probabilities and to predict values. Biases to which these heuristics lead, and the applied and theoretical implications of these observations will be examined. 

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