• Demonstrate comprehensive understanding of the ideas/theories/concepts covered in the course.
• Demonstrate the ability to appropriately apply those ideas/theories/concepts to decision situations.
• Provide structure to decision situations based on theories from the class, and use that structure to analyze and discuss decision situations.
• Recognize common cognitive limitations and biases that affect human inference, decision making, and risk management, as well as ways to overcome or limit them.
• Know how to interpret and use basic probabilistic information when making decisions that involve uncertainty.

This course will provide students with a foundation in the area of judgment and decision making under uncertainty, an inter-disciplinary field that draws on insights from cognitive and social psychology, economics and statistics. Emphasis will be placed on situations that involve risk and require risk management by individuals, groups or organizations. Studentswill learn and apply a variety of theories related to decision making and risk management, especially focusing on how cognitive limitations affect decision making and related behaviors. Students will learn ways to recognize limitations and make decision processes more effective. We will apply three types of theories: normative, meaning theories about how decisions ought to be made; descriptive, meaning theories that describe how people actually make decisions; and prescriptive, meaning theories about how to help people make better decisions.

The course will cover some basic probability and statistics. Students will study descriptive theories of human inference and understanding of probabilistic information. We will examine widely observed limitations in human inference and learn how to use decision models to help overcome them. We will consider the implications for both individuals, groups, and public policy decision makers.

Tentative literature

The Psychology of Judgment and Decision Makingby Scott Plous, McGraw Hill, 1993  (or a similar text book to be determined.)
 
 Austin, L. and Fischhoff, B. (2010).  Consumers’ collision insurance decisions: A mental models approach to theory evaluation. Journal of Risk Research. Online first publication: April 21, 2010.  DOI: 10.1080/13669871003703278.
 
Aven, T. and O. Renn. (2009).  On risk defined as an event where the outcome is uncertain. Journal of Risk Research, 12:1, 1-11.
 
Baron, J. 2008. What is thinking?  In Thinking and Deciding, Fourth Edition.  Cambridge: Cambridge University Press, pp 5-22
 
Baron, J. 2008. Normative theory of choice under uncertainty’ Thinking and Deciding, Fourth Edition.  Cambridge: Cambridge University Press, Chapter 10, pp 233-256
 
Dawes, R. (1988).  Appendix A1 in Rational Choice in an Uncertain World,  275-291.  Fort Worth: Harcourt Brace Jovanovich
 
Dawes, R.  1979.  The robust beauty of improper linear models in decision making.  American Psychologist, July 1979, pp 571-582
 
Edmondson, A. 2002. Group Process in the Challenger Launch Decision (A), HBS Case 9-603-068
 
Edmondson, A. 2003. Process in the Challenger Launch Decision (B), HBS Case 9-603-070.
 
Downs, J., W. Bruine de Bruin, and B. F.  2008. Parents’ vaccination comprehension and decisions. Vaccine (2008) 26, 1595—1607
 
Fischhoff, B., Nadaï, and I. Fischhoff (2001).  Investing in Frankenfirms. The Journal of Psychology and Financial Markets,  2 (2):100-111
 
Gawande, A.  (1999, February 8).  The cancer cluster myth.  New Yorker, 34-37. http://crab.rutgers.edu/~mbravo/cluster.pdf
 
Gigerenzer, G. and Goldstein, D. 1996.  Reasoning the fast and frugal way: Models of bounded rationality.  Psychological Review, 103(4), 650-669
 
Hastie and Dawes, 2010.  ‘What is decision making?’ in Rational Choice in an Uncertain World, 2^nd ed., Chap 2, pp 23-43. Thousand Oaks: Sage.
 
Krishnamurti, T., Eggers, S. and Fischhoff, B. 2008).  The impact of over-the counter availability of ‘‘Plan B’’ on teens’ contraceptive decision making.  Social Science in Medicine.  67: 618-627.  
 
Lovallo, D. & Kahneman, D. 2003. Delusions of Success: How Optimism Undermines Executives’ Decisions, Harvard Business Review, 81(7), pp.56-63. (Library link forthcoming)
 
Patterson, K., (2002, May 5).  What doctors don’t know (almost everything).  New York Times Magazine.   Available at: http://www.nytimes.com/2002/05/05/magazine/what-doctors-don-t-know-almost-everything.html
 
Renn, O.  (2006).  Risk Governance: Towards an integrative approach (White Paper).  IRGC, Geneva.  Pp 20-26.  For those interested, full white paper is available online at: http://www.irgc.org/IMG/pdf/IRGC_WP_No_1_Risk_Governance__reprinted_version_.pdf
 
Roberts M.  and Sonnenberg, F. (2003).  Decision Modeling Techniques. In Decision Making in Health Care: Theory, Psychology and Applications, G. Chapman (ed), Cambridge University Press, pp 20-36
 
Simon, H. (1979).  Rational Decision Making in Business Organizations. The American Economic Review, v 69, No4 (Sept), 493-513.
 
Slovic, P. and Peters, E.  (2006).  Risk perception and affect.  Current directions in psychological science, 15 (6): 322-325.
 
 
Tversky A., and Kahneman, D (1971).  Belief in the law of small numbers.  Psychological Bulletin, 76:2, 105-110.
 
Tversky A., and Kahneman, D (1981). The framing of decisions and the psychology of choice.  Science, 211, 453-458.