INTRODUCTION TO SOCIAL SCIENCES:
Lecture 2: Two Systems
System 1: Fast, automatic, frequent, emotional, stereotypic, unconscious.
e.g. - display disgust when seeing a gruesome image
- solve 2+2=?
- read a text on a billboard
*Priming: exposure to one stimulus affects response to other stimulus.
Many priming forms:
- Perceptual/Conceptual
- Repetition
- Associative/Context
System 2: Slow, effortful, infrequent, logical, calculating, conscious, require attention.
e.g. - direct your attention towards someone at a loud party
- Count the number of A's in a certain text
- solve 17x24=?
Hypotheses People show less attentional blindness when:
- Video is shown clearly (quality)
- ‘Visually different’ event stands out more from background (gorilla vs woman with umbrella example)
- Primary task (counting) is easy
*attentional blindness: occurs when an individual fails to perceive an unexpected stimulus in plain sight, purely as a
result of a lack of attention
4 clusters of the systems:
- Consciousness
- Evolution
- Functional characteristics
- Individual differences
Limitations:
- Not always clear what is meant precisely with term “two systems” theory
- Not clear/precise where each system is in the brain
- Two separate systems might be misleading (might be a bit of both)
- Limited predictive power
“Two systems” relevance for economics:
- Simple way to describe human behavior
- Many colleagues know about it
- Useful framework for understanding heuristics and biases
- Starting point for finding more detailed explanation
, Lecture 3: Heuristics & Biases
Rational choice theory is the view that people behave as they do because they believe that performing their
chosen actions has more benefits than costs.
Heuristics: Efficient thinking strategies/ mental shortcuts that help make quick decisions and
judgements but can lead to errors/biases.
Bias: A tendency (either known or unknown) to prefer one thing over another that prevents objectivity, that
influences understanding or outcomes in some way
Availability heuristic bias: when people make judgments about the probability of events on the basis of
how easy it is to think of examples. / Overestimate things we can remember and underestimate the things
we cannot remember.
The frequencies at which events come to mind are usually not accurate reflections of the probabilities of such
events in real life.
It can be considered rational behavior as it makes judgements based on availability.
Availability heuristic bias is a System 1, as it automatically pops-up information that we remember.
Representative heuristic bias: when people categorize a situation based on a pattern of previous
experiences or beliefs about the scenario. However, it can lead to close-mindedness such as stereotypes.
Can be considered rational behavior.
Anchor Heuristic bias: tendency to be influenced by irrelevant numbers. Shown higher/lower numbers,
experimental subjects gave higher/lower responses. / refers to the tendency to accept and rely on, the
first piece of information received before making a decision. That first piece of information is the anchor
and sets the tone for everything that follows.
E.g.: When thinking of the value of a house you want to buy, you will be influenced by the asking price.
2 mechanisms of Anchoring:
1. Adjustment: failure to adjust from a high or low anchor
2. Priming: how previous encounters/events can affect our behavior
Anchors are often outside our control and therefore not rational.
Decision making can be influenced through anchors!
Decisions under increasing uncertainty:
Minimax assumes full rationality in decision making.
In case the game tree becomes too large, the human
decision maker might use stored memories (and
metacognition) to explore only parts of the game tree he
perceives as promising.
Metacognition/theory of mind: thinking about your own
and others’ thinking (e.g. if he has that card he would have
played it earlier in the game)
Probabilistic reasoning: guessing the real and subjective chances
Lecture 2: Two Systems
System 1: Fast, automatic, frequent, emotional, stereotypic, unconscious.
e.g. - display disgust when seeing a gruesome image
- solve 2+2=?
- read a text on a billboard
*Priming: exposure to one stimulus affects response to other stimulus.
Many priming forms:
- Perceptual/Conceptual
- Repetition
- Associative/Context
System 2: Slow, effortful, infrequent, logical, calculating, conscious, require attention.
e.g. - direct your attention towards someone at a loud party
- Count the number of A's in a certain text
- solve 17x24=?
Hypotheses People show less attentional blindness when:
- Video is shown clearly (quality)
- ‘Visually different’ event stands out more from background (gorilla vs woman with umbrella example)
- Primary task (counting) is easy
*attentional blindness: occurs when an individual fails to perceive an unexpected stimulus in plain sight, purely as a
result of a lack of attention
4 clusters of the systems:
- Consciousness
- Evolution
- Functional characteristics
- Individual differences
Limitations:
- Not always clear what is meant precisely with term “two systems” theory
- Not clear/precise where each system is in the brain
- Two separate systems might be misleading (might be a bit of both)
- Limited predictive power
“Two systems” relevance for economics:
- Simple way to describe human behavior
- Many colleagues know about it
- Useful framework for understanding heuristics and biases
- Starting point for finding more detailed explanation
, Lecture 3: Heuristics & Biases
Rational choice theory is the view that people behave as they do because they believe that performing their
chosen actions has more benefits than costs.
Heuristics: Efficient thinking strategies/ mental shortcuts that help make quick decisions and
judgements but can lead to errors/biases.
Bias: A tendency (either known or unknown) to prefer one thing over another that prevents objectivity, that
influences understanding or outcomes in some way
Availability heuristic bias: when people make judgments about the probability of events on the basis of
how easy it is to think of examples. / Overestimate things we can remember and underestimate the things
we cannot remember.
The frequencies at which events come to mind are usually not accurate reflections of the probabilities of such
events in real life.
It can be considered rational behavior as it makes judgements based on availability.
Availability heuristic bias is a System 1, as it automatically pops-up information that we remember.
Representative heuristic bias: when people categorize a situation based on a pattern of previous
experiences or beliefs about the scenario. However, it can lead to close-mindedness such as stereotypes.
Can be considered rational behavior.
Anchor Heuristic bias: tendency to be influenced by irrelevant numbers. Shown higher/lower numbers,
experimental subjects gave higher/lower responses. / refers to the tendency to accept and rely on, the
first piece of information received before making a decision. That first piece of information is the anchor
and sets the tone for everything that follows.
E.g.: When thinking of the value of a house you want to buy, you will be influenced by the asking price.
2 mechanisms of Anchoring:
1. Adjustment: failure to adjust from a high or low anchor
2. Priming: how previous encounters/events can affect our behavior
Anchors are often outside our control and therefore not rational.
Decision making can be influenced through anchors!
Decisions under increasing uncertainty:
Minimax assumes full rationality in decision making.
In case the game tree becomes too large, the human
decision maker might use stored memories (and
metacognition) to explore only parts of the game tree he
perceives as promising.
Metacognition/theory of mind: thinking about your own
and others’ thinking (e.g. if he has that card he would have
played it earlier in the game)
Probabilistic reasoning: guessing the real and subjective chances
