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SIMPLEHEURISTICS
THAT MAKE US SMART
Gerd Gigerenzer
Max Planck Institute for Human Development Berlin
How do human beings reason when the conditions for rationality postulated by the model of neoclassical economics are NOT met?
Herbert A. Simon
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RISK VS UNCERTAINTY
RISK: How should we make decisions when all relevant alternatives,
consequences, and probabilities are known?Requires statistical thinking
UNCERTAINTY: How should we make decisions when NOT all alternatives,
consequences, and probabilities are known?
Requires heuristics and intuition
Gigerenzer & Selten Eds. 2001 Bounded rationality: The adaptive toolbox. MIT PressGigerenzer, Hertwig & Pachur Eds. 2011. Heuristics: The foundations of adaptive behavior. OUP
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DECISIONS UNDER UNCERTAINTY ≠ DECISIONS UNDER RISK
1. UNCERTAINTY. The best decision under risk is not the best decision under uncertainty, and vice versa.
2. HEURISTICS. Heuristics are indispensable for good decisions under uncertainty. They are not the product of a flawed mental system.
3. ADAPTIVE TOOLBOX: The descriptive study of an individual’s or institution’s repertoire of heuristics.
4. ECOLOGICAL RATIONALITY: The normative analysis of the environments to which a given heuristic is adapted.
Gigerenzer, Todd & the ABC Research Group 1999. Simple heuristics that make us smart. OUP.
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Three Programs of Bounded Rationality
• Optimization under constraints (as-if rationality)“Boundedly rational procedures are in fact fully optimal procedures when one takes account of the cost of computation in addition to the benefits and costs inherent in the problem as originally posed.”
Arrow 2004
• Cognitive illusions (deviations from optimization)“Our research attempted to obtain a map of bounded rationality, by exploring the systematic biases that separate the beliefs that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent models.”
Kahneman 2003
• Homo heuristicus (ecological rationality)“Models of bounded rationality describe how a judgment or decision is reached (that is, the heuristic processes or proximal mechanisms) rather than merely the outcome of the decision, and they describe the class of environments in which these heuristics will succeed or fail.”
Gigerenzer & Selten 2001
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I.HEURISTICS:
TOOLS FOR UNCERTAINTY
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Do Parents Prefer First and Last Borns? Middle-borns Get Least Time
Hertwig et al 2002 Psychological Bulletin
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Heuristic + Environment = Outcome.The1/N Heuristic Implies the Observed Pattern
Hertwig et al 2002 Psychological Bulletin
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How to make investment decisions?
Harry Markowitz
Mean-Variance-Model
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How to make investment decisions?
Harry Markowitz
Mean-Variance-Model
1/NAllocate your money equally
to each of N funds
DeMiguel et al. 2009, Review of Financial Studies
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Ecological Rationality
Low uncertainty High uncertaintyFew alternatives Many alternativesHigh amount of data Small amount of data
–––––––––––––––––––––––––––––––––––––––Make it complex Make it simpleMean-Variance 1/N
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10/2007
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total error = (bias)2 + variance + noise
Gigerenzer & Brighton 2009 Topics in Cognitive Science
Why Heuristics?Answer: The Bias-Variance Dilemma
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Three Ways of Introducing Biasfor Making Better Inferences
1. 1/N Introduce bias by ignoring the weights of reasons.
2. ONE-REASON-HEURISTICS Introduce bias by ignoring reasons.
3. LEXICOGRAPHIC HEURISTICS Introduce bias by ignoring the dependency between reasons.
Dawes 1979 American Psychologist
.Gigerenzer & Brighton 2009 Topics in Cognitive Science
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Haldane, A. G. “The Dog and the Frisbee”. Federal Reserve Bank Economic Policy Symposium, Jackson Hole 2012. www.bankofengland.co.uk
The Bank of England Program: Simple Heuristics for a Safer World of Finance
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Three Widespread Misconceptions
1. Heuristics are always second-best (“accuracy-effort trade-off”).
2. Complex problems require complex solutions.
3. Heuristics are unconscious and error-prone (“System 1”).
Kruglanski & Gigerenzer 2011, Intuitive and deliberate judgments are based on common principles. Psychological Review
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The Research Program
The Adaptive ToolboxWhat are the heuristics we use, their building blocks, and the
evolved capacities they exploit?
Ecological RationalityWhat types of environments does a given heuristic work in?
Intuitive DesignHow can heuristics and environments be designed to improve
decision making?
Gigerenzer & Selten Eds. 2001. Bounded rationality: The adaptive toolbox. MIT Press
Todd, Gigerenzer & ABC Research Group 2012. Ecological rationality. OUP
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II.THE SOCIAL GAME OF HEALTH CARE
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How Do Neo-Classical Economists DecideWhether Or Not To Take PSA Tests?
2006 Meeting of the American Economic Association, Boston133 male attendees, age 40+
• ComplianceDid you have a PSA test? 65% (50+)
• Information about pros and cons Any medical source? 95% NOAny written info? 78% NO
• DecisionWeighted pros and cons? 65% NOWho influenced your decision? 65% Doctor (and/or wife)
Berg, Biele & Gigerenzer 2013
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The Social Heuristic
“Trust your doctor”
is ecologically rational if:
1. Physicians don’t practice defensive decision making 2. are trained in understanding health statistics
3. have no conflicts of interest
Gigerenzer 2007, Gut Feelings. Penguin
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Prostate Cancer Early Detectionby PSA screening and digital‐rectal examination. Numbers are for men aged 50 years or older, not participating vs. participating in screening for 10 years.
1,000 men without screening: 1,000 men with screening:
P
X
Men dying from prostate cancer:
Men dying from any cause:
Men that were diagnosed and treated for prostate cancer unnecessarily:
Men without cancer that got a false alarm and a biopsy:
Men that are unharmed and alive:
8
200
–
–
800
8
200
20
180
600
P P PP P P PP P P PP P P PP
XX XX XXXXX X XXXXX XXX XX
Source: Djulbegovic, Beyth, Neuberger et al.
2010. British Medical Journal.
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"I had prostate cancer, five, six years ago. My chances of surviving prostate cancer and thank God I was cured of it, in the United States, 82 percent. My
chances of surviving prostate cancer in England, only 44 percent under socialized medicine.”
Rudy Giuliani, New Hampshire radio advertisement, October 2007
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Lead Time Bias
Gigerenzer, Gaissmaier, Kurz-Milcke, Schwartz, & Woloshin 2007. Psychological Science in the Public Interest.
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Overdiagnosis
Gigerenzer, Gaissmaier, Kurz-Milcke, Schwartz, & Woloshin 2007. Psychological Science in the Public Interest.
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Conflicts of InterestDeception by one of the most prestigious US cancer centers: M. D. Anderson
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412 primary-care physicians (national sample)
Survival rates: 83% judged mortality benefit as largeMortality rates: 28% judged mortality benefit as large
Which proves that a cancer screening test “saves lives”?
1. Screen-detected cancers have better 5-year survival. 76%2. More cancers are detected in screened populations. 47% 3. Mortality rates are lower among screened persons. 81%
Wegwarth, Schwartz, Woloshin, Gaissmaier & Gigerenzer, Annals of Internal Medicine, 2012.
Innumeracy:Do U.S. Physicians Understand 5-Year Survival
Rates?
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The SIC-Dilemma in Health Care:Institutions Where “Trust Your Doctor” Is Not Ecologically Rational
Self Defense (Defensive Decision-Making)
Innumeracy (Few Doctors Understand Health Statistics)
Conflicts of Interest
Gigerenzer & Muir Gray Eds. 2011. Better doctors, better patients, better decisions. MIT Press
Gigerenzer 2014. Risk savvy. Penguin Press.
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III.
INTUITIVE DESIGN:SIMPLE HEURISTICS FOR SAFER HEALTH CARE
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Chest Pain = Chief Complaint
EKG (ST, T wave ∆'s)
History ST&T Ø ST T ST ST&T ST&TNo MI& No NTG 19% 35% 42% 54% 62% 78%MI or NTG 27% 46% 53% 64% 73% 85%MI and NTG 37% 58% 65% 75% 80% 90%
Chest Pain, NOT Chief ComplaintEKG (ST, T wave ∆'s)
History ST&T Ø ST T ST ST&T ST&TNo MI& No NTG 10% 21% 26% 36% 45% 64%MI or NTG 16% 29% 36% 48% 56% 74%MI and NTG 22% 40% 47% 59% 67% 82%
No Chest PainEKG (ST, T wave ∆'s)
The heart disease predictive instrument (HDPI)
See reverse for definitions and instructions
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CoronaryCareUnit
regularnursing
bed
chief complaint of chest pain?
CoronaryCareUnit
regularnursing
bed
yes
ST segment changes?
any one other factor? (NTG, MI,ST,ST,T)
yes
yesno
no
no
Intuitive Design:Fast and Frugal Tree for Treatment Allocation
Green & Mehr (1997)
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.0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1.0
.1
.2
.3
.4
.5
.6
.7
.8
.9
1
Sens
itivi
tyPr
opor
tion
corr
ectly
ass
igne
d
False positive rateProportion of patients incorrectly assigned
Physicians
Heart DiseasePredictive Instrument
Fast and Frugal Tree
Emergency Room Decisions: Admit to the Coronary Care Unit?
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The Research Program
The Adaptive ToolboxWhat are the heuristics we use, their building blocks, and the
evolved capacities they exploit?
Ecological RationalityWhat types of environments does a given heuristic work in?
Intuitive DesignHow can heuristics and environments be designed to improve
decision making?
Gigerenzer, Hertwig & Pachur Eds. 2011. Heuristics: The foundations of adaptive behavior. OUP
Hertwig, Hoffrage & ABC Research Group 2013. Simple Heuristics in a social world. OUP