Decision Science News

7TH MAX PLANCK SUMMER INSTITUTE ON BOUNDED RATIONALITY

ANNOUNCEMENT
The 7th Summer Institute on Bounded Rationality in Psychology and Economics will
introduce graduate students and early career researchers from different disciplines to the
study of bounded and ecological rationality. This novel approach to human decision making
examines the simple processes and cognitive mechanisms that enable good decision
making in specific environments. This perspective has seen rapid theoretical development
over the last decade with psychologists and economists taking the lead in showing how the
study of bounded rationality can provide a greater understanding of the human mind and
adaptive decision making.

Classical theories of decision making are largely based on a vision of rationality that is
unrealistic. For example, “rational” humans are often imagined to be equipped with
unlimited knowledge, time, and information-processing power. In contrast, to understand
the way that people with limited resources actually make good decisions in everyday social
and economic tasks, bounded rationality (which should not be confused with optimization
under constraints or the heuristics and biases program) starts with a more psychologically
plausible perspective: Humans are able to make good decisions by using simple heuristic
processes that are adapted to particular task environments (i.e. ecological rationality).

AIM
The main objective of the Summer Institute is to introduce students from various fields to
the study of bounded rationality. This year our specific focus will be on ecological
rationality. The first goal will be to provide an overview of the main research areas in
which ecological rationality has been studied. This will include an introduction to the
specific research methods used through participation in experiments, observations, and
simulations. As well, participants and faculty will discuss several key findings from
economics and psychology. To insure active involvement of all participants, lectures will be
balanced with small group workshops. As a second goal, the Summer Institute will also
give participants the opportunity to present their own research in a poster session, in order
to facilitate feedback, discussion and future research development.

BOARD
The interdisciplinary Summer Institute is directed by Gerd Gigerenzer (Max-Planck-
Institute for Human Development, Berlin, Germany). This year’s keynote speaker will be
Nobel laureate Vernon Smith. Other faculty will include members of the organizing
institute, as well as several invited international speakers from a variety of disciplines.

APPLICATION
To ensure an excellent learning environment participation in the summer school is limited
to approximately 35 talented graduate students and postdoctoral fellows from around the
world. The summer institute provides stipends to all participants to cover part of their
expenses for travel and accommodation. Precise information on the stipends will be
announced to the applicants at a later point in time. Interested students should apply by
April 7, 2008 with a brief application letter, CV, and one short letter of recommendation,
preferably sent by email.

CONTACT
For more details on the Summer Institute and the application process, please visit our
website: www.mpib-berlin.mpg.de/summerinstitute

JOBS IN THE UK AT DECTECH AND OXFORD

DECISION TECHNOLOGY

Decision Technology is a commercial decision research spin-out, based in central London, co-founded by Nick Chater and Henry Stott. We work internationally, mainly advising large corporations on consumer decision making. We are currently hiring several analysts, ideally with a mix of very strong academic background and ability, combined with enthusiasm for working in a fast-paced commercial environment, with potentially rapid career development.

http://www.jobs.ac.uk/jobs/LS576/PhD_and_Graduate_Recruiting/

We also have one post dedicated to research on football (soccer) prediction, in collaboration with The Times newspaper.

http://www.jobs.ac.uk/jobs/LS575/Football_Research_Position/

If you are interested, please contact Dr Ian Graham i.graham at dectech.org

NUFFIELD COLLEGE – UNIVERSITY OF OXFORD

Five-Year Research Fellowship in Experimental Social Sciences Nuffield College intends to appoint, with effect from 1st September 2008, a Research Fellow in Experimental Social Science (RFESS).

Applications are invited from post-doctoral researchers of any country wishing to undertake research in any area of experimental social sciences. The main interests of the College are in Economics, Politics and Sociology, but these are broadly construed to include, for example, social science approaches to history, social and medical statistics, international relations, social psychology, public policy, and social policy.

The College has recently begun an initiative in Experimental Social Science that includes a 20 station experimental lab that is dedicated to experimental research by scholars and students at Oxford University. It also includes a regular seminar on Experimental Social Science that highlights the research of leading experimental social scientists. The RFESS will be expected to play an active role in promoting the development of the Nuffield Centre for Experimental Social Science. The RFESS’s main responsibility is to engage in independent scholarly research and to promote the development of experimental social science in the College. He or she will have no teaching or administrative obligations but will be expected to participate in the intellectual life of the College. This will include contributing to interdisciplinary exchanges that build on Experimental Social Science. The RFESS will be expected to organize, periodically, seminars or workshops in the area of experimental social science over the course of the five-year term of their appointment and the College can help finance and organize these activities.

• Research Fellow salary scale points 12-19: £31,625-£41,348.
• Free lunch and dinner in College (Common Table)
• Membership of the Senior Common Room

The Fellowship is intended for scholars from any country, who have completed a doctoral thesis and who are in the early years of an active research career. The Fellowship is equivalent to an Assistant Professorship in terms of academic standing, but it carries no teaching obligations. The Fellowship would normally be taken up on 1st September 2008. The appointment will be for up to 5 years.

Further particulars and an application form can be obtained from the College web
page: http://www.nuffield.ox.ac.uk or from the Administrative Officer, Nuffield
College, Oxford OX1 1NF. Email: justine.crump at nuffield.ox.ac.uk. Applications must be received by Friday, 4 April 2008.

MAJOR CHOICE STRATEGIES

The editor’s somewhat annotated copy of Hastie & Dawes

Reid Hastie and Robyn M. Dawes, in their classic Rational Choice in an Uncertain World (pp. 232-234), outline some “major choice strategies,” stemming from several schools including the Heuristics and Biases, Adaptive Decision Maker, and Fast and Frugal research programs:

Strategy: DOMINANCE
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	LOW	NON-COMPENSATORY	ALTERNATIVE	YES
“Search for an alternative that is at least as good as every other alternative on all important attributes and choose it or find an alternative that is worse than any other alternative on all attributes and throw it out of the choice set.”
Strategy: ADDITIVE LINEAR (Multi-Attribute Utility Theory)
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	V. HIGH	COMPENSATORY	ALTERNATIVE	YES
“Weight all the attributes by their importance (with reference to the current goals of the decision maker). Then consider each alternative one at a time and calculate a global utility by valuing each attribute, weighting it by its importance, and adding up the weighted values.”
Strategy: ADDITIVE DIFFERENCE
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	V. HIGH	COMPENSATORY	ATTRIBUTE	YES
“Consider two alternatives at a time; compare attribute by attribute, estimating the difference between the two alternatives; and sum up the differences across the attributes to provide a single overall difference score across all attributes for that pair. Carry the winner of this comparison over to the next viable alternative and make the same comparison. At the end of this process, the best alternative is the one that has ‘won’ all the pairwise comparisons.”
Strategy: SATISFICING (CONJUNCTIVE)
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	LOW	NON-COMPENSATORY	ALTERNATIVE	NO
“First set ‘acceptability’ cutoff points on all important attributes; then look for the first alternative that is at least as good as the cutoff values on all important attributes or use the strategy to select a set of good-enough alternatives (all above the cutoff points) for further consideration.”
Strategy: DISJUNCTIVE
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	LOW	NON-COMPENSATORY	ALTERNATIVE	NO
“First, set ‘acceptability’ cutoff points on the important attributes; then look for the first alternative that is at least as good as the cutoff value on any attribute or use the strategy to select a set of alternatives that are very good on at least one dimension for further consideration.”
Strategy: LEXICOGRAPHIC (AND TAKE-THE-BEST)
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	MEDIUM	NON-COMPENSATORY	ATTRIBUTE	NO
“First, review the attributes and pick the one most important attribute; then choose the beest alternative on that attribute. If there are several “winners” on the first attribute, go on to the next most important attribute and pick the best remaining alternative(s) on that attribute. Repeat until only one alternative is left … [Similar to the] take-the-best fast-and-frugal heuristic (successful in choice and judgment environments that reflect the distributions of alternatives and attribute values in real, everyday environments). The only adjustment to our description would be to substitute the word ‘validity’ (predictive accuracy) for ‘importance’; order the attributes considered by their past validity in discriminating between good and bad alternatives.”
Strategy: ELIMINATION BY ASPECTS
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	MEDIUM	NON-COMPENSATORY	ATTRIBUTE	NO
“Pick the first attribute that is salient and set a cutoff ‘acceptability’ point on that attribute. Throw out all alternatives that are below the cutoff on that one attribute. Then pick the next most attention-getting attribute, set an ‘acceptability’ cutoff on that attribute, and again throw out all alternatives that are below the cutoff. Repeat until only one alternative is left.”
Strategy: RECOGNITION HEURISTIC
	Mental Effort	Compensatory vs. Noncompensatory?	Whole vs. Part	Exhausive?
	LOW	NON-COMPENSATORY	ALTERNATIVE	NO
“In some choices, people are so poorly informed about the alternatives that they simply rely on ‘name recognition.’ They choose the first alternative that they recognize … in many realistic choices and judgments the ‘fast and frugal’ recognition choice heuristic behaves surprisingly well.”

Source: Hastie, Reid & Dawes, Robyn M. (2001). Rational choice in an uncertain world. Sage: Thousand Oaks, CA, pp. 232-234.

About the Authors:

REID HASTIE

Reid Hastie is a Professor of Behavioral Science on the faculty of the Graduate School of Business in the Center for Decision Research at the University of Chicago. His primary research interests are in the areas of judgment and decision making (legal, managerial, medical, engineering, and personal), memory and cognition, and social psychology. He is best known for his research on legal decision making (Social Psychology in Court [with Michael Saks]; Inside the Jury [with Steven Penrod and Nancy Pennington]; and Inside the Juror [edited]) and on social memory and judgment processes (Person Memory: The Cognitive Basis of Social Perception [several co-authors]). Currently he is studying: the role of explanations in category concept representations (including the effects on category classification, deductive, and inductive inferences); civil jury decision making; the role of frequency information in probability judgments; and the psychology of reading statistical graphs and maps.

Reid Hastie vita

ROBYN M. DAWES

Robyn Dawes is the Charles J. Queenan, Jr. University Professor Ph.D.: University of Michigan Department Member Since: 1985 at the Department of Social & Decision Sciences at Carnegie Mellon University. His research interests spans five areas: intuitive expertise, human cooperation, retrospective memory, methodology and United States AIDS policy. He states, “I write journal articles and books because I believe the information they contain could be valuable — at least on a “perhaps, maybe” basis. I have never written anything with the expectation that it will sell, or become a “citation classic” (although one of my articles has). I believe that in American culture we are obsessed with outcomes rather than with behaving in ways that tend to bring about the best expected outcomes, while “time and chance” play a very important role. […] Some of my clinical colleagues claim that feelings are not understood until they can be put into words. My own view is that every translation of a feeling, thought, idea or mathematical form into words involves at least a small element of automatic distortion, often a much larger element.”

POLITIMETRICS

Lionel Page (University of Westminster), in conjunction with Paul Antoine Chevalier (Paris School of Economics), Dan Goldstein (London Business School & Decision Science News), Leighton Vaughan Williams (Nottingham Trent University), and Peter Urwin (University of Westminster) are pleased to bring you Politimetrics.com a Web site that uses prediction markets to forecast election outcomes and more.

What candidate would have the highest probability to win the presidential election if nominated?

What candidate has the program which is more likely to foster growth, reduce unemployment and crime?

All these crucial questions for the voters in this 2008 US election cannot be answered using traditional polls. Using prediction markets in a innovative way, the website Politimetrics.com proposes answers to these questions.

Politimetrics.com presents the estimation of the the conditional probability of success of each candidate if nominated/elected. The numbers are estimated in real time, directly from the prices on specific Intrade contracts.

At this stage of the primary campaign, politimetrics proposes the best answer available the question: “who are the candidates the most likely to win the presidential election if nominated?” Later on in the campaign, we plan to present an even more interesting answer: “which candidate would be the most successful president on a list of issues?” To do so, we have proposed to Intrade a series of specific contracts (listed under the section “Impact of Next President” on their website). Eventually, we hope to be able to answer to questions like:

Is Hilary Clinton more likely to be more effective in managing the economy than John McCain?

Is Mitt Romney more likely to decrease crime than Barack Obama?

SIMPLE WAYS TO DETECT AND COMMUNICATE STATISTICAL EFFECTS

Decision Science News is fond of heuristics and the Simonian view that for many problems organisms face, optimization is a fiction and satisficing makes us smart. Statistics is an area in which it is easy to see precision that isn’t there and find “optima” in problems that lack them. It can be refreshing to look at a problem in a simplified form to get a feeling for what is going on before obsessing over insignificant digits.

Andrew Gelman is previewing a few working papers on rules of thumb that make it easy to detect and communicate statistical effects. “Recommended reading,” says Decision Science News, quoting itself.

Mini Talk on Simple Statistical Methods

Splitting a predictor at the upper quarter or third and the lower quarter or third

Scaling regression inputs by dividing by two standard deviations

Photo credit: http://www.flickr.com/photo_zoom.gne?id=327299636

SYMPOSIUM ON STATISTICAL CHALLENGES IN ELECTRONIC COMMERCE RESEARCH

2008 Symposium on Statistical Challenges in eCommerce Research

Call for Papers

We invite submissions to the Fourth Symposium on Statistical Challenges in eCommerce Research (SCECR 08) to be hosted in New York City by NYU Stern’s Center for Digital Economy Research, on May 18th and 19th, 2008.

Symposium Theme: Social Networking and User-Generated Content

Our focus this year is on the statistical challenges and opportunities involving Web 2.0 applications and data. Today’s Web is increasingly interactive and networked, providing a platform for consumers to disseminate information about products, vendors, buyers and sellers, as well as about themselves and their social connections, through the use of social networking sites, blogs, wikis and interactive opinion forums. Our workshop’s theme is based on this development, since it causes the data that are available to ecommerce researchers to be increasingly user-generated, and increasingly networked.

We envision the research presented in the symposium will discuss both the opportunities and challenges relating to the statistical analysis of these new forms of ecommerce data and its use as the basis for empirical research about and facilitated by electronic commerce. As just a few examples of these opportunities and challenges:

* Characteristics of user-generated reviews and reviewers can affect ecommerce demand; feedback in reputation systems can affect sellers’ pricing policies and the nature of competition; the attributes of user-generated search queries can affect the performance of search engine advertising, and the content of customer support dialogs can affect product design. There are immense possibilities for the creative use of these data in research. There are also significant opportunities to address statistical challenges that this use raises: on the econometric identification of how the presence of this content affects outcomes that are determined simultaneously with its generation, towards developing new statistical approaches underlying the automated analysis and mining of textual content, on effectively sampling the vast repositories of such user-generated text on the web, and towards understanding the process by which this content is generated by self-interested users.

* Networked data sets have powerful explanatory and predictive power in ecommerce research.

Social-network-based word-of-mouth marketing can affect user adoption, recommendation networks can affect the structure of ecommerce demand, and usage behaviors can be influenced by local networks of friends, employees or peers. Realizing the promise of such data in ecommerce research requires advances in techniques for sampling these data, creating new identification techniques for the use of such data in econometric analysis, developing collective inference methods for more robust predictive modeling and learning, interpreting the structural properties of networks in a statistically meaningful way, and modeling the evolution of networked data sets as a stochastic process. Beyond the symposium’s theme, we also welcome and encourage submissions that raise statistical challenges in other areas of ecommerce research. Frequent topics that past workshop presentations have studied include: interpreting data from online auctions; consumer profiling using web clickstreams; search advertising; methods and models for large dynamic ecommerce data sets; representative sampling from the Internet; analyzing pricing and piracy data for digital goods, and modeling/ mining spatial ecommerce data. More generally, SCECR aims to identify problems and research questions related to empirical research in electronic commerce by bringing together researchers from computer science, economics, information systems, marketing, statistics, and other related fields. We believe this confluence will help understand better how different research perspectives are connected to one another and how, together, they can achieve the modernization and enhancement of empirical research methods.

Submission Guidelines

Authors should submit abstracts of their work for consideration for the symposium (the abstracts should be about 2 pages in length). These abstracts should clearly highlight the statistical challenges that the presentation of the research will raise and/or address. If available, a link to a more detailed description of the research (for instance, a working paper) can be included.

These abstracts should be e-mailed to scecr2008@stern.nyu.edu by February 15, 2008. PDF is the preferred format. This is a work-in-progress symposium, so abstracts will be evaluated based on their alignment with the symposium’s objective of furthering our understanding of statistical challenges in ecommerce research, the anticipated contribution of the research they summarize, and their potential for stimulating discussion at the symposium. Decisions on acceptance will be made by March 5, 2008.

SCECR 2008 Co-Chairs

* Anindya Ghose, aghose at stern.nyu.edu
* Foster Provost, fprovost at stern.nyu.edu
* Arun Sundararajan, asundara at stern.nyu.edu

For additional information about SCECR 08, visit the symposium website at:

http://w4.stern.nyu.edu/ceder/events.cfm?doc_id=7909

Photo credit: http://www.flickr.com/photo_zoom.gne?id=2080084585&size=m

THE SOCIAL LEARNING STRATEGIES TOURNAMENT

Kevin Laland and Luke Rendell have received funding from the European Commission to organize a major international multi-disciplinary tournament on the evolution of social learning, inspired by Robert Axelrod’s famous Prisoner’s Dilemma tournaments on the evolution of cooperation.

In recent years there has been a lot of interest (spanning several research fields, but especially economics, anthropology, and biology) in the problem of how best to acquire valuable information from others. Mathematical and computational solutions to this problem are starting to emerge, often using game-theoretical approaches. We feel the time is right for such a tournament, a sentiment shared by leading researchers in the field who are enthusiastic about this project. We have set up a committee of world-leading scientists as experts to help us design the tournament (Rob Boyd, Marc Feldman, Magnus Enquist, Kimmo Erikkson) and other leading authorities in this area of science, including Axelrod, have been advising us.

In the competition, entrants will submit behavioural strategies detailing how to respond to the problem of resource gain in a complex, variable environment in terms of combinations of individual and social learning. Where social learning is involved, entrants will be required to specify effective rules (e.g. conform, imitate the most successful individual, copy in proportion to each demonstrator’s payoff, copy when dissatisfied, etc). Entered strategies will be evaluated in two stages, with good performers in pair-wise contests going forward to an all-against-all melee. The author(s) of the strategy that performs best overall will be presented with a cash prize of 10,000 euros at the European Human Behaviour and Evolution Society meeting, in St. Andrews, U.K. in April 2009.

The competition is now running, and has a closing date of June 30 2008 and active website: http://www.intercult.su.se/cultaptation/tournament.php

Photo credit: http://www.flickr.com/photo_zoom.gne?id=170030408

RESEARCH SCIENTIST IN COGNITION AND DECISION MAKING AT MAX PLANCK – BERLIN

Decision Science News got its start at the Center for Adaptive Behavior and Cognition in Berlin, Germany and can attest that it is one of the sweetest, if not the sweetest, research posts on the planet. All research, no teaching, and next to zero admin. The rank is equivalent to assistant professor. The well-heeled institute pays for all travel and research costs. The support staff to faculty ratio is incredibly high. In addition, Berlin speaks English, has great nightlife, and sits between Eastern and Western Europe.

The Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development in Berlin, under the direction of Gerd Gigerenzer, is seeking applicants for a research scientist position equivalent to an assistant professor. The position is for 6 years (renewable every 2 years) beginning August 2008, but earlier or later start dates are possible. Salary depends on experience. Candidates must have a PhD. Except for mentoring doctoral students and postdoctoral fellows, there are no teaching requirements.

Candidates should be interested in studying the cognitive mechanisms underlying bounded, social, and ecological rationality in real-world domains. Current and past researchers in our group have backgrounds in psychology, cognitive science, economics, mathematics, biology, and computer science to name but a few. The center provides excellent resources, including support staff and equipment for conducting experiments and computer simulations, generous travel support for conferences, and, most importantly, the time to think.

For more information about our group please visit our homepage at www.mpib-berlin.mpg.de/abc or write researchscientist2008 (at) mpib-berlin.mpg.de. The working language of the center is English, and knowledge of German is not necessary for living in Berlin and enjoying the active life and cultural riches of this city. We strongly encourage applications from women, and members of minority groups. The Max Planck Society is committed to employing more individuals with disabilities and especially encourages them to apply.

Please submit applications (consisting of a cover letter describing research interests, curriculum vitae, up to five reprints, and 3 letters of recommendation) by January 21st 2008 to ensure consideration. Applications will be accepted until the position is filled. The preferred method of submission is a single PDF file for the cover letter and CV, plus PDF copies of the reprints e-mailed to researchscientist2008 (at) mpib-berlin.mpg.de. Alternatively, they can be mailed to Ms. Wiebke Moeller, Center for Adaptive Behavior and Cognition, Max Planck Institute for Human Development, Lentzeallee 94, 14195 Berlin, Germany. Letters of recommendation can be emailed or mailed.

Photo credit: http://www.flickr.com/photo_zoom.gne?id=314832330

CAN PSYCHOLOGISTS HELP DOCTORS MAKE BETTER DECISIONS?

Gerd Gigerenzer, Director at the Max Planck Institute for Human Development in Berlin, has a piece in this month’s APA Observer about helping physicians understand screening tests.

Some choice quotes:

Medical doctors tend to think of psychologists as therapists, useful for emotionally disturbed patients, but not for members of their own trade. Research on transparent risk communication is beginning to change that view, however.

As a young researcher, I was struck by a study conducted by David Eddy, now Senior Advisor for Health Policy and Management at Kaiser Permanente. He asked American physicians to estimate the probability that a woman had breast cancer given a positive screening mammogram and provided them with the relevant information: a base rate of 1 percent, a sensitivity of 80 percent, and a false-positive rate of 9.6 percent. Approximately 95 out of 100 physicians wrongly reckoned this probability to be around 75 percent, whereas the correct answer is 7.7 percent (Eddy, 1982). Eddy concluded that many physicians make major errors in statistical thinking that threaten the quality of medical care.

How could doctors not have known the answer? Even if some of the doctors tested were “mathematically challenged,” they should already have known that only about one in 10 women with a positive screening mammogram has cancer. Mammography is one of the most frequently tested medical procedures, with widely published results about its accuracy. But most doctors don’t have the time to read medical journals, and few women know that a positive mammogram is like an activated car alarm — usually a false call. As a result, millions of women who test positive every year are unnecessarily frightened.

Gigerenzer points out that “relative risk reduction” is a much-bandied-about, little-understood way to present information.

Another numerical representation that tends to cloud doctors’ minds is relative risk. We read that mammography screening reduces the risk of dying of breast cancer by 25 percent. Many people believe this to mean that the lives of 250 out of 1,000 women are saved, whereas a group of Swiss gynecologists’ interpretations varied between one in 1,000 and 750 in 1,000! How large is the actual benefit? Randomized trials showed that, out of 1,000 women not screened, four died of breast cancer within about 10 years, whereas among those who were screened, three died. Thus, the absolute risk reduction is one out of 1,000 women, or 0.1 percent, whereas the relative risk reduction is 25 percent. In a representative 2006 survey of 1,000 German citizens, I found that hardly anyone understands what the 25 percent means. Other sources of confusion are single-event probabilities and five-year survival rates.

Photo credit:http://www.flickr.com/photo_zoom.gne?id=362184895&size=m

DEC 2007 SOCIETY FOR JUDGMENT AND DECISION MAKING NEWSLETTER PUBLISHED

Society for Judgment and Decision Making Newsletter Editor Dan Goldstein reports that the final SJDM newsletter of 2007 is ready for download and that it is packed full of conference announcements and job opportunities, especially postdocs.

http://www.sjdm.org/files/newsletters/07-dec.pdf

Enjoy!