Problem solving & decision making

• Problem solving is when we don't immediately know the solution. 3 main steps involved in solving a problem include: (1) representation or interpretation of the problem (2) strategy and (3) evaluation.
• Problem solving refers to a state of desire for reaching a definite goal from a present condition, and may need complex logic to reach this goal. Problem solving is considered to be the most complex of all intellectual functions, and has been defined as a higher-order cognitive process that requires modulation and control of more routine or fundamental skills.
• Decision making is a type of problem solving in which we already know the possible solutions. The process of decision making involves identifying the best solution. Identifying the best solution can be very difficult.
• Decision making is regarded as the cognitive process resulting in the selection of a belief or a course of action among several alternative possibilities. It is the process of identifying and choosing alternatives based on the values and preferences of the decision-maker. It can be regarded as a problem-solving activity, although instead of solving the problem, the solutions are available and one must be chosen.

There are four main stages:

• (1) Interpret and understand: without defining the problem, it's less likely, if at all possible, to choose the correct problem-solving strategy
• (2) Generate potential solutions: this may involve sub-goal decomposition; breaking the problem apart into smaller pieces
• (3) Test solutions to disconfirm one or more
• (4) Evaluate results and if necessary, revise steps 1,2,3.

Problem-solving strategies

• Schemas: problem-solving schemas help us find solutions to the same/similar problems that we've experienced before
• Trial & error: usually wastes time and isn't an efficient method of problem solving
• Algorithms: formulas or procedures that generate correct solutions. They can be incredibly time consuming, and are often beyond human capabilities
• Heuristics: 'rules of thumb' - help in simplifying and solving problems, although they don't guarantee a correct solution

• Framing problems: incorrect or poor problem representations e.g 2 treatments: (1) "there is a 50% chance of success" (2) "there is a 50% chance of failure". Both exactly the same, but people are more likely to pick the first one because of framing
• Functional fixedness: tendency to use objects in a standard way
• Negative state of mind: tendency to solve problems in a set way, even when a different approach may be more successful
• Persistence state of mind: old strategies continue to be used, even if they're less efficient - if we fail to notice that the situation has changed
• Lack of expertise: experts and novices solve problems differently

Defining the problem is vital. Convergent thinking is a way of thinking that is directed toward one correct solution to a problem. Many problems have multiple solutions and require divergent thinking (original or inventive thought). Effective problem solving strategies are often time-consuming, leaving us susceptible to falling foul of many common errors.

Rational decision making begins with defining the problem. The next step is to search for alternative solutions, then identify consequences and probabilities, and then estimate the costs and benefits. Look for ways to optimise and maximise profit.

Heuristic: a strategy that may or may not produce the correct answer. They are used because they simplify decision making and can be effective if the problem is simple. The heuristic technique employs a method not guaranteed to be optimal or perfect, but is sufficient for the immediate goals. Heuristics can be mental shortcuts that ease the cognitive load of making a decision. Examples of this include: making an educated guess, stereotyping, profiling or common sense.

Rational: realistic approach to decision-making. Bounded rationality: the idea that in decision making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision.

Psychologists distinguish between rational and heuristic decision making

Rational decision making route:

• requires thinking about the information
• scrutinising evidence and reasoning
• evaluating information in light of facts presented and relevant knowledge
• thoughtful and deliberate

Heuristic decision making route:

• requires little or no elaboration of the information encountered
• relies on strategies that may or may not produce the correct answer
• the focus is often on cues not related to the message

Cognitive bias refers to the systematic pattern of deviation from norm or rationality in judgement, whereby inferences about other people and situations may be drawn illogically. Bias can arise from heuristics

The representative heuristic

• Basic tendency to estimate the likelihood of something on the basis of how well it fits a previous event or a stereotype. It is probably the first decision we make based on prior knowledge

The conjunction fallacy

• Is a form of invalid reasoning that occurs when it's assumed specific conditions are more probable than a single general one. The probability of two events occurring together (in conjunction) is always less than or equal to the probability of either one occurring alone.

Availability

• A heuristic by which a judgement or decision is based on information that is most easily retrieved from memory. But, the ease with which we remember examples is not perfectly correlated with objective frequency. Any factor besides frequency that calls attention to the event may lead people to overestimate that event's frequency.

The framing effect

• Example: You are sick with a potentially fatal rare disease; which treatment would you prefer: (a) new treatment that has 50% success rate (b) new treatment that has 50% failure rate. Most people choose A despite the fact that they have the same outcomes. Framing influences how we perceive information and can interfere with logical reasoning, especially when choices are framed to highlight potential positive or negative outcomes, thereby triggering emotions that alter our perceptions of risk.

Confirmation bias

• The tendency to look for evidence in support of a belief and to ignore evidence which disproves the belief. Confirmation biases contribute to overconfidence in beliefs in the face of contrary evidence. It can lead to a self-fulfilling prophecy. Park et al: examined how online stock market investors gathered information about prospective stock. Those who displayed the strongest confirmation bias were the most over-confident investors and subsequently made the least money

Overconfidence

• The tendency to place too much faith in your own knowledge, opinions, beliefs, and decisions, When we're confident in the correctness of our views and reluctant to seek evidence that could prove them wrong, we can easily make faulty decisions.

In summary, there are 6 common decision-making heuristics:

• representativeness - a heuristic by which a new situation is judged on the basis of its resemblance to previous events
• conjunction fallacy - a mistaken belief that the probability of a conjunction of 2 events is greater than the probability of a single event
• availability - a heuristic by which a judgement or decision is based on information that's most easily retrieved from memory
• framing effect - idea that the same information, problems, or options can be presented in different ways
• confirmation bias - tendency to look for evidence in support of a belief
• overconfidence - placing too much faith in your own knowledge, opinions & beliefs

Decisions can be influenced by (1) individual characteristics and (2) context. Psychological research shows that there are no reliable non-verbal cues to show deception. Honest people can look as nervous as liars in stressful situation

Extra-legal factors can have an impact on legal decision making. Minority racial groups, poor people, and uneducated people are more likely to get a harsher sentencing in court. More sympathetic sentences are given to defendants who are similar to the judicial decision maker, and who are attractive.

Overcoming reliance on heuristics - which route is used depends on two main factors: motivation and ability. High involvement with the issue usually results in greater motivation to rely on rational decision making rather than heuristics. When it's possible to identify the influence of biased processing on one's judgement, and one knows the appropriate alternate strategy to apply, bias may be reduced. However, bias is often caused by unconscious or uncontrollable processes.