INFM 718A / LBSC 705 Selective Perception Information For Decision Making

Lecture 13

One Perspective Selective Perception

• “We do not first see, then define, • Perception is affected by expectations. we define first and then see.” Walter Lippmann (quoted in Plous, • Bruner and Postman’s (1949) 1993.) experiments.

• What did they find?

1 Normal Cards vs. Trick Cards Four Strategies to Cope

•Dominance • Trick cards had wrong (inverse) colors, such as a black three of hearts. (Check • Compromise the cover of the Plous book.) • Disruption • Bruner and Postman found that it took people about four times longer to recognize the trick cards than normal • Recognition cards.

Dominance Compromise

• These people saw a red three of hearts or • These people reported a red six of spades a black three of spades. as a purple six of spades (or of hearts). • A black four of hearts was reported as a • In the first case form is dominant and color greyish four of spades. A red six of clubs is fit to expectation; in the second case vice was reported as “six of clubs illuminated versa. by red light.” • 50% showed compromise behavior to red • Bruner and Postman called this “Perceptual trick cards; 11% to black trick cards. Denial.”

2 Disruption Recognition

• Some people had trouble forming any • Some people recognized that there was a perception at all. problem.

• Disruption was rare but quite dramatic. • Even then, some failed to correctly identify what was wrong.

Expectations… How many ‘f’s in this phrase?

• … can strongly influence perceptions. • These functional fuses have been developed after years of scientific • We probably knew that already. However, investigation of electric phenomena, we saw that empirical evidence supports combined with the fruit of long experience the hypothesis. in the part of the two investigators who have come forward with them for our meetings today. • Can more experience with the subject topic strengthen the influence of expectation on perception?

3 Experience Æ Expectations Æ Perception Potent Expectations

• The second example: estimating the • Experiment by Wilson and Abrams (1977) number of ‘f’s in a phrase. • Heart rate was affected by whether the subject believed he was given alcohol • Non-native speakers of English perform more than whether he was actually given better. (Do they?) alcohol. • Expectations turned out to be more • The initial “Why?” is not completely important than changes in blood answered. chemistry!

A more sophisticated experiment… Dartmouth vs. Princeton (1951)

• … by McMillen, Smith and Wells-Parker • Hastorf and Cantril (1954) concluded that (1989) “It is inaccurate and misleading to say that • “High sensation seekers” who believed they different people have different ‘attitudes’ had consumed alcohol drove more concerning the same ‘thing.’ For the ‘thing’ recklessly than those who believed they had simply is not the same for different not. people…”1 • “Low sensation seekers” who believed they had consumed alcohol drove more cautiously than those who believed they had 1) Hastorf, A.H., Cantril, H., 1954, “They saw a game: A case study,” The Journal of Abnormal and Social Psychology, not. 49, 129-134.

4 Hostile Media Effect Some Conclusions

• Vallone, Ross and Lepper (1985) studied • Perceptions are selective by nature. the 1980 U.S. presidential elections. • Perception depends on cognitive and • Approximately 1/3 of the 160 subjects motivational factors. (registered voters) felt that the media had been biased. In ~90% of these cases, • Decision makers should question their respondents felt the bias was against the own motivations and expectations while 2 candidate they supported. making judgments and decisions.

2) Vallone, R.P., Ross, L., Lepper, M.R., 1985, “The hostile media phenomenon: Biased perception and perceptions of media bias in coverage of the Beirut massacre,” Journal of Personality and Social Psychology, 49, 577-585.

Cognitive Dissonance

• Festinger and Carlsmith’s (1959) experiment. (Tedious tasks.) Cognitive Dissonance

5 I would lie… Self-Perception Theory

• … for twenty dollars or for free, but not for • Festinger regarded cognitive dissonance one dollar! as a negative motivation factor, one that should be avoided. • So, I make myself believe that the tasks were indeed enjoyable if I am paid only $1. • Bem disagreed and argued that people build their beliefs from observing • Cognitive dissonance says that people try themselves behave. to reduce or avoid psychological inconsistencies.

Self-Perception Theory So what happened…

• Argues that people build their beliefs and • … in Festinger and Carlsmith’s attitudes based on how they behave under experiment? various situations. • $1 case subjects looked at their own behaviors and concluded that they should • People tend to do that more when their have enjoyed the tasks, … since they internal cues about the situation are weak. would not lie for $1. (i.e. they do not have preconceived • $20 case subjects concluded that they attitudes about the situation.) bent the truth a little for the money involved.

6 The Difference Two Main Types of Dissonance

• Cognitive Dissonance Theory attributes • Pre-Decisional Dissonance the findings to a motivation to reduce inner – Sherman and Gorkin’s (1980) experiment. conflict. – Kantola, Syme, and Campbell’s (1984) study. – Doob et al.’s (1969) experiment. • Self-Perception Theory explains the (Mouthwash.) findings in terms of how people infer the • Post-Decisional Dissonance causes of their behaviors. – Knox and Inkster’s (1968) survey. (Horse bets.) – Frenkel and Doob’s survey (1976) (Elections.)

Conclusions • Marketing: Explicitly label introductory offers. • Politics – Social Activism: Solicit small Memory and Hindsight Biases contributions to campaigns and social causes. • Aronson’s (1972) statements. • Changes in attitude can follow changes in behavior.

7 Is Memory Reconstructive? Is Memory Reconstructive?

• Myers’ (1990) example. • Loftus and Palmer’s (1974) experiments.

• “Close your eyes and recall a scene in • “How fast were the cars going?” which you experienced something pleasurable.” • “Did you see any broken glass?”

•…when the cars smashed, bumped, etc?

Are Memories Stored Hindsight Bias Separately? • Bransford and Franks (1971) (Ants) • “I-knew-it-all-along” effect

• There is an element of “memory • Elections, medical decisions, buying construction” when remembering. decisions, games, etc.

• Do you have your own examples?

8 How to Reduce Hindsight Bias

• Consider reasons why results might have turned out differently. Plasticity • Slovic and Fischhoff’s (1977) study.

Plasticity Example

• “Plasticity … refers to a discrepancy in • Alternative A: Losing $50 with p=1.00. how people answer two versions of the • Alternative B: Losing $200 with p=0.25 same question.”1 and losing nothing with p=0.75.

• EV(Alternative A) = EV(Alternative B)

• About 80% choose Alternative B.

1) Plous, Scott, 1993, The Psychology of Judgment and Decision Making, pp.58, McGraw-Hill, New York, NY.

9 However Order Effects

• When put in an insurance premium • The order of consecutive questions, or the context, about 65% choose Alternative A. order of response alternatives to questions • Possible reasons: may affect the responses by individuals. – Insurance premium context emphasizes the potential loss ($200), thus making it look big. • Question order effects – Buying insurance is considered a prudent • Response alternative order effects behavior socially. –…?

Question Order Effects Question Order Effects

From Schumann and Presser (1981) The other half of the respondents were asked the About half of the respondents were asked the two two questions in the reverse order as given questions in the order below: below: • 1) Do you think a Communist country like Russia • 1) Do you think the United States should let should let American newspaper reporters come Communist newspaper reporters from other in and send back to America the news as they countries come in and send back to their papers see it? the news as they see it? • 2) Do you think the United States should let • 2) Do you think a Communist country like Russia Communist newspaper reporters from other should let American newspaper reporters come countries come in and send back to their papers in and send back to America the news as they the news as they see it? see it?

10 Response Alternative Order Results Effects Yes • These effects are slighter than the • Case 1: question order effects. – Q1 82% • A common response order effect is a type – Q2 75% of recency effect, where respondents tend • Case 2: to choose the last response alternative. – Q1 55% – Q2 64%

Example What Can be Done?

From Schumann and Presser (1981) • What can be done to overcome order • Version 1: Should divorce in this country be effects, (considering that we have to put easier to obtain, more difficult to obtain, or stay the questions and the responses in one as it is now? order or another)? • Respond percentages: 23%, 36%, and 41% • Version 2: Should divorce in this country be easier to obtain, stay as it is now, or more difficult to obtain? • Respond percentages: 26%, 29%, and 46% In both cases, the most popular alternative was the last one.

11 Pseudo-Opinions Example

• Some respondents tend to offer opinions From Hartley (1946) even on issues about which they know • How Close Do You Fell to These very little. Nationalities? – Danireans • Such respondents tend to shape their – Pireneans “pseudo-opinions” (since they do not have – Wallonians “real opinions”) according to how the • More than 80% of the respondents rated question is asked. these “nationalities” even though they do not exist!

Example Pseudo-Op.s In Political Affairs

From Gill (Tide Magazine, 1947) • Pseudo-opinions can become important • What is your opinion of the Metallic Metals factors in political affairs. Act? • In general, about 30% of respondents offer – Good move for U.S. – Should be left to individual states pseudo-opinions. – O.K. for foreign states, but should not be • 30% can change the result of almost any required in U.S. major election and referendum. – Of no value at all. • Pseudo-opinions are particularly common • 70% of the respondents gave an opinion in issues concerning foreign and military although there is no Metallic Metals Act! policy.

12 Filtering Pseudo-Opinions Inconsistency

• Offering response alternatives such as “No • “Inconsistency refers to a discrepancy opinion” or “I don’t know” can help filter out between two related attitudes (attitude- pseudo-opinions. attitude inconsistency) or between an • However, there may be a trap here. attitude and a corresponding behavior People may try to look like they know (attitude-behavior inconsistency).”1 about the issue for social reasons, even if they do not. • “Choose not to offer opinion at this time” may be a better alternative. Saves face. 1) Plous, Scott, 1993, The Psychology of Judgment and Decision Making, pp.58, McGraw-Hill, New York, NY.

A-A Inconsistency Example A-B Inconsistency Example

From Prothro and Grigg (1960) From Darley and Batson (1973) • Democratic principles and specific • Many seminary students who were about applications. to give a speech on the parable of the • Random sample of registered voters in Good Samaritan failed to help a person in Ann Arbor, MI and Tallahassee, FL. need when they were rushed. • 51% “Only well-informed people should be permitted to vote.” • 79% “Only taxpayers should vote.”

13 How Common is Inconsistency?

• Wicker (1969) reviewed 46 studies and concluded that inconsistency is so common that it is more likely that attitudes Wording and Framing Effects will not be closely related to overt behaviors than they will be. • On the other hand, Ajzen and Fishbein (1977) argued that attitudes concerning particular actions and targets are generally good predictors of related behaviors.

Question Wording and Framing Safe and Safer

• The way a question is worded or framed • 40% of the respondents of a poll in Britain may affect individuals’ responses to that said the nuclear weapons of their country question. made them “feel safe.” • When the question was asked slightly differently, 50% of the respondent said the nuclear weapons of their country made them “feel safer.”

14 Disadvantage of Middle Another Example Categories From Converse and Schuman (1970) • Middle categories may act as a “safe” • “Should the U.S. Army withdraw from alternative since they are “midway” and Vietnam faster or slower?” attract pseudo-opinions. – 42% “faster,” 16% “slower,” 29% “same as now.” • “Is the pace with which the U.S. Army withdraws from Vietnam too fast, too slow, or about right?” – 29% “too slow,” 6% “too fast,” 49% “about right.”

Open Ended vs. Listed Examples Responses • Some responses may be chosen by • Schuman and Scott’s (1987) study: “The substantially more respondents when they most important problem facing this country are listed as specific alternatives than in today?” an open question, (a question without specific response alternatives.) • Schwarz, Hippler, Deutsch and Strack’s (1985) study: “How much TV do you watch daily?”

15 Hilarious Examples “Marketing Application” Example

From Harris (1973) • “How long was the movie?” – (Mean Answer = 130 min.) • “How short was the movie?” – (Mean Answer = 100 min.) • “How tall was the basketball player?” – (Mean Answer = 79’’) • “How short was the basketball player?” – (Mean Answer = 69’’)

Social Desirability Examples

• People tend to choose responses they From Clymer (1982) judge to be “socially desirable” over those • Nuclear weapons freeze they judge not to be so. From Budiansky (1988) • Support for Nicaraguan rebels

From Schuman and Presser (1981) • Sending troops in case of a Vietnam-like situation.

16 Allow or Forbid Other Examples

From Rugg (1941) Schuman and Presser (1981) • “Do you think that the U.S. should allow • Repetition of Rugg’s experiment. public speeches against democracy?” – 62% “No.” Hippler and Schwarz (1986) • “Do you think that the U.S. should forbid • Peep shows, X-rated films, salt on public speeches against democracy?” highways. – 46% “Yes.” • At least 16% would “not allow” rather than “forbid”!

Framing When Combined

• Decision 1: • A & D: Lose $760, p=0.75; Gain $240, • Alternative A: Gain $240, p=1.00 p=0.25 • Alternative B: Gain $1000, p=0.25 • B & C: Lose $750, p=0.75; Gain $250, • 84% chose A. p=0.25

• Decision 2: • B & C are better than A & D when • Alternative C: Lose $750, p=1.00 combined, but far more people preferred A • Alternative D: Lose $1000, p=0.75 & D over B & C. • 87% chose D.

17 Other Examples Psychological Accounting

Tversky and Kahneman (1981) • People tend to frame outcomes as well as • Alternative programs to fight a disease. choices. Tversky and Kahneman called this “psychological accounting.” Schelling (1981) • Example: Losing your ticket vs. losing • Child tax cuts vs. “no-child tax”. money. (Tversky and Kahneman, 1981.) • Example: Calculator on sale vs. jacket on sale. (Tversky and Kahneman, 1981.)

Conclusions Conclusions

• People’s answer are a function of (among •…: other things): – Range of suggested response alternatives – Question order – Order of the response alternatives – Question context – Existence of middle categories as response – Question format (open vs. closed) alternatives – Whether the pseudo-opinions were filtered – Framing of problems (gains vs. losses) – Existence of catch phrases in questions • It would be wise not to take the findings of surveys at face value, but approach them from a critical perspective instead.

18 Expected Value

• Example: Flip a coin and throw a die. If the coin shows heads and the die show an Expected Utility Theory even number you get $2 times the number on the die. Otherwise you get nothing.

Expected Value Expected Value 1: 0.166 0.5 * 0.166 = 0.083 2: 0.166 0.5 * 0.166 = 0.083 • 0.083*$2*2 + 0.083*$2*4 + 0.083*$2*6 3: 0.166 0.5 * 0.166 = 0.083 = $2 Throw die 4: 0.166 0.5 * 0.166 = 0.083 Heads: 0.5 5: 0.166 0.5 * 0.166 = 0.083 6: 0.166 0.5 * 0.166 = 0.083 Flip coin 1: 0.166 0.5 * 0.166 = 0.083 2: 0.166 0.5 * 0.166 = 0.083 Tails: 0.5 3: 0.166 0.5 * 0.166 = 0.083 Throw die 4: 0.166 0.5 * 0.166 = 0.083 5: 0.166 0.5 * 0.166 = 0.083 6: 0.166 0.5 * 0.166 = 0.083

19 St. Petersburg Paradox Utility

Utility 1 1 K • ½ * $2 + ¼ * $4 + /8 * 8 + … + /K * ($2) = $1 + $1 + $1 + … + $1 = ∞

• How much would you pay to play this game?

Wealth

Expected Utility Principles of Expected Utility Th.

• Sum of the utilities of all possible • Ordering alternatives outcomes of a chance event. •Dominance • Cancellation • Transitivity Σ pi * ui • Continuity • Invariance

20 Allais Paradox

• Situation 1: – Alternative A: p=1, $1,000,000 Paradoxes in Rationality – Alternative B: p=.10, $2,500,000; p=.89, $1,000,000; p=.01, $0

• Situation 2: – Alternative A: p=.11, $1,000,000; p=.89, $0 – Alternative B: p=.10, $2,500,000; p=.9, $0

Allais Paradox Ellsberg’s Paradox 10 89 1 A 30 BALLS 60 BALLS $ 1M $ 1M $ 1M Betting Alternatives Red Black Yellow 10 89 1 Situation 1 1: A red ball $100 $0 $0 B 2: A black ball $0 $100 $0 $ 2.5M $ 1M $ 0

10 89 1 30 BALLS 60 BALLS A Betting Alternatives Red Black Yellow $ 1M $ 0 $ 1M 1: A red or yellow ball $100 $0 $100 Situation 2 10 89 1 2: A black or yellow $0 $100 $100 B ball $ 2.5M $ 0 $ 0

21 Intransitivity Intransitivity

Dimensions Gamble Probability Payoff Expected IQ Experience of a Win Value A 7/24 $5.00 $1.46 A 120 1 year B 8/24 $4.75 $1.58 Applicants B 110 2 years C 9/24 $4.50 $1.69 C 100 3 years D 10/24 $4.25 $1.77 E 11/24 $4.00 $1.83

Intransitivity Preference Reversals

Committee Members Pair High Probability EV High Payoff EV

Candidates Ann Bob Cindy Don Ellen 1 .99 win $4.00 $3.95 .33 win $16.00 $3.94 .01 Lose $1.00 .67 Lose $2.00 Joe Schmoe 1 1 2 3 3 2 .95 win $2.50 $2.34 .40 win $8.50 $2.50 Jane Doe 2 3 3 1 1 .05 Lose $0.75 .60 Lose $1.50 Al Einstein 3 2 1 2 2 … … … … …

22 Are Violations of EUT Irrational?

• No information about the cost of errors versus the cost of following the principles. Decision Making Models • A non-logical strategy may be rational if it provides a good approximation to the utility provided by normative methods, in the long run.

Satisficing Prospect Theory

• People “satisfice” rather than optimize for • Assumes that value functions for gains several reasons: and losses are different. – They do not have complete information – They do not understand the available information – They cannot calculate precisely –…

23 Prospect Theory Decision Weights

• Problem 1: Decision – Alternative A: p=.50, gain $1000 Weight – Alternative B: p=1.00, gain $500 (84% chose this.)

• Problem 2: – Alternative A: p=.50, lose $1000 (≅70% chose this.) Probability – Alternative B: p=1.00, lose $500

Prospect Theory Certainty Effect

• Problem 1: • People attribute more value (utility) to – Alternative A: p=1/1000, win $5000 (≅ 75% eliminating risk versus reducing risk. chose this.) • Russian roulette example. – Alternative B: p=1.00, win $5 • Probabilistic insurance example.

• Problem 2: – Alternative A: p=1/1000, lose $5000 – Alternative B: p=1.00, lose $5 (>80% chose this.)

24 Pseudocertainty Effect Regret Theory

• People value eliminating risk more than • Based on two basic assumptions: reducing it even when the certainty is – People feel rejoice or regret according to the apparent rather than real. outcomes of their decisions. • Vaccine example. – People try to anticipate and take account of these sensations when making decisions. • Dry cleaner example. • Regret theory can explain many of the paradoxes we discussed above.

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