THE WORK OF WASON overlapped at the end of the 1960s with the beginnings of Tversky (1937-1996) and Kahneman. They focused not so much on logic, but rather on how people judge probability. Their argument was that humans make judgments on the likelihood of events or outcomes by using rules of thumb called heuristics.
An heuristic is a simple rule that guides problem solving to process information in order to generate quick solutions. They discovered three main heuristics underlying human judgment. One was “availability”, where you judge the probability by the ease in which instances could be brought to mind. The more often you hear about something, the more common it is.
For example, in the United States, when people are asked what they believe is more common, suicide or homicide, most answer murder, although the opposite is actually the case. Our judgment can be influenced by other factors, such as sensationalized news reporting and the prevalence of fictional detectives.
In the main, availability works well over your lifetime because judgments are based on memory and this is a better tool for decision-making than taking a random guess every time. However, this doesn’t mean you are invulnerable to illusions.
The second is the “representativeness” heuristic, a bias where a situation is judged by similarity to previous experiences or events. This can be useful for making a quick decision, but it can also be limiting as it may lead to close-mindedness, such as falling back on stereotypes.
In a 1983 study, participants were asked to judge the probability that a woman named Linda (who had liberal interests as a student) was a feminist, a bank teller, or both a bank teller and feminist. Probability dictates that the likelihood of her being both a bank teller and feminist would be less than her being either a feminist or a bank teller. However, many participants judged that she was more likely to be a bank teller and a feminist than a bank teller alone. Effects of the representative heuristic are plentiful and include, among others, the “Gambler’s Fallacy,” “Hot Hand Fallacy” and “Base Rate Fallacy.”
The third heuristic is “anchor and adjust.” The idea is that if you are trying to estimate an unknown quantity, such as next year’s sales numbers or the price of Microsoft stocks next week, you anchor on one value and adjust that as new data or evidence comes to light. This is perfectly reasonable, but people are often influenced by inappropriate anchors. They can also fail to adjust sufficiently.
In one study, Tversky and Kahneman spun a wheel of fortune numbered 1 to 100 in a subject’s presence. They then asked the subject a question, such as to estimate the percentage of African nations in the United Nations. Although the number on the wheel was clearly random, the estimates given were influenced by the spun number: those with low numbers gave low estimates and those that had high numbers gave high estimates. In this case, people were influenced by inappropriate anchors, but in other cases they adjust insufficiently.
In another study (Northcraft and Neale, 1987), real estate agents were asked to estimate the value of a piece of property on the market. The agents were given information about the property, including details of the list price (initial value). Although all agents denied their valuation was influenced by it, those who received a higher list price (for the same property) invariably estimated a higher appraisal value. The study showed they were in fact strongly anchored to the list price and adjusted downwards, but the final figure they provided was still biased in the direction of the initial anchor value.