Academic journal article Journal of the Indian Academy of Applied Psychology

Cognitive and Non-Cognitive Determinants of Heuristics of Judgment and Decision-Making: General Ability and Personality Traits

Academic journal article Journal of the Indian Academy of Applied Psychology

Cognitive and Non-Cognitive Determinants of Heuristics of Judgment and Decision-Making: General Ability and Personality Traits

Article excerpt

Heuristics of judgment and decision-making under conditions of uncertainty are well researched and established (Kahneman, Slovic, Tversky, 1982; Gilovich, Griffin, & Kahneman, 2002). The general theorization about these heuristics revolves around cognitive load and heuristics are considered as preferred mechanisms to rational strategy. Their associations with other non-cognitive domains are comparatively less explored. The present paper explores the relationship of the g-factor of intelligence and Five-Factor Model of personality with decision-making heuristics.

Heuristics

The early work by Tversky and Kahneman (1973, 1974), Kahneman & Tversky (1972) on heuristics and biases in judgments under uncertainty emphasized that human beings make systematic errors and biases in thinking. Their approach to heuristics maintained that they are imprecise form of optimal statistical procedures. These statistical procedures are too complicated for ordinary human minds to comprehend leading to information overload. Hence, heuristics may be less accurate but, have faster ways of computing, and are used by human minds.

Alternative views of heuristics are also presented here. Herbert Simon (1955) theorized heuristics in terms of 'bounded rationality' strategies that guide information search and adjust problem representations to assist in reaching solutions. Duncker and Koehler viewed it with the definition of "serving to find out or discover" (Duncker, 1935/1945). In a complete contrary view, Gigerenzer, Hoffrage & Goldstein (2008) argue that 'heuristics represents adaptive strategies that evolved in tandem with the fundamental psychological mechanisms' and pitche for 'fast and frugal' heuristics. This definition of heuristic is opposite from Kahneman-Tversky's views. The review of conflicting views about heuristics is beyond the scope of this paper (see Gilovich and Griffin, 2002). However, the representativeness and the availability heuristics (Tversky & Kahneman, 1974) have been utilized in the present experiment, even though the author appreciates alternative views about heuristics.

Judgment and Decision-making Heuristics

In a series of experimental investigations, Kahneman and Tversky's heuristics and biases approach for judgment and decision-making under uncertainty have championed and the availability, representativeness and anchoring and adjustment heuristics were argued to lead to various biases (Kahneman, Slovic, & Tversky, 1982). They proposed that humans use a small number of intuitive strategies called heuristics instead of rational choice theory or formal logic while making judgments regarding probabilities, frequencies, and class memberships. These heuristics reduce their complextaskto a simpler level. The heuristics and biases are likely to influence important decisions like buying a house, biding in auctions, professional and health judgments, etc. (Tversky & Kahneman, 1974).

Representativeness heuristic is used to judge membership of a class by judging similarity to stereotypes. Those who use this heuristic, evaluate the subjective probability of an uncertain event by the degree, to which it is similar in essential properties to its parent population, and reflect the essential features of the process, by which it is generated (Kahneman & Tversky, 1972). Similarities to a sample of a population, reflections of randomness, sampling distribution, etc. are determinants of representativeness. Insensitivity to prior probabilities (base rate fallacy), insensitivity to sample size, misconception of chance (gambler's fallacy), insensitivity to predictability, illusion of validity, misconception of regression are noted biases due to representativeness heuristics.

In availability heuristics, the probability or frequency of an event or class is judged with ease with which the examples of it can be thought of, whereas, in reality, this mental activity is unrelated to actual frequency and is affected by other factors than actual frequency. …

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