Pseudocertainty Effect

In prospect theory, the pseudo-certainty effect is the tendency for people to perceive a result as certain, when in fact it is uncertain in multi-stage decision making. It refers to the tendency of people to make choices that are unfavorable to risk if the expected outcome is positive, but risks looking for options to avoid negative outcomes. It refers to the tendency of people to make non-risk choices when the expected outcome is positive, but to make risk-based choices to avoid negative outcomes. Kahneman and Tversky ultimately called this effect a certainty in which people tend to prefer certain outcomes despite higher value in another scenario, even if the risk of worthlessness is less than 1% (Kahneman and Tversky, 1979). [Sources: 2, 9, 11, 13]

In multi-stage decision-making, those who are prone to the influence of the pseudo-certainty effect often reject the uncertainty of previous decision scenarios or stages when evaluating a later stage, which was obvious when those who chose option A subsequently chose option D. In prospect theory, the effect of pseudo-certainty is it is the tendency of people to perceive a result as certain when in reality it is uncertain. [Sources: 2, 7]

The effect of pseudo-certainty can be observed in multi-stage decision-making, when the assessment of the reliability of the result at an earlier stage of the decision is ignored when choosing an option at later stages. This suggests that people are adding value to completely risk-free scenarios. The Allais paradox and the effects of certainty / pseudo-certainty. This paradox refers to the violation of decision theory and contains distortions associated with the effect of certainty and pseudo-certainty. [Sources: 2, 8]

Daniel Kahneman explained the pseudo-determinism effect, and he won the Nobel Prize in Economics for his work with Amos Tversky in decision-making and decision-making theory. In an article in 1953, he described that an individual’s decision-making process may be inconsistent with the theory of expected utility (the theory of the curriculum that leads to the greatest expected utility or outcome of the individual’s choice). [Sources: 2, 13]

When there is no definite choice and the options are equally difficult to evaluate, people will find it difficult to compare uncertain results. They concluded that when people make choices in the later stages of a problem, they often do not realize that the uncertainty in the early stages will affect the results. So, know that you tend to maintain positive results, but take the risk to avoid negative results, change the wording, and see if another option makes sense. Cognitive bias is a tendency to think in a certain way, which often leads to deviations from rational and logical decisions. [Sources: 0, 3, 4, 13]

Their choice can be influenced simply by paraphrasing the descriptions of the results without changing the actual usefulness. When making certain decisions (for example, in question 1), we need to determine the probabilities of various outcomes. Summary Human decision making exhibits systematic simplifications and deviations from the principles of rationality (heuristics) that can lead to suboptimal decision outcomes (cognitive bias). [Sources: 3, 11, 12]

The preference for certainty biases the bias between option 1 and option 2 (having higher expected utility)-this choice is incompatible with the expected utility theory. In the absence of preference that may distort their certainty, people usually choose option 2 (having the highest expected utility), which is consistent with the expected utility theory. In short, people tend to focus on the positive rather than the negative when faced with choices. [Sources: 0, 3]

If you visit this page from time to time to refresh your mind, the spacing effect will help highlight some of these thought patterns to keep our prejudices and naive realism in check. [Sources: 6]

The reason for this is that, all other things being equal, people will prefer a certain payoff to an uncertain one. All four principles can influence decision-making and contribute to cognitive biases, but the extent of their influence can vary depending on biases and situations. Attention bias is our tendency to focus more on emotionally dominant stimuli and overlook other important data when making decisions. An effect whereby someone’s judgment of the logical strength of an argument is influenced by the validity of an inference. [Sources: 3, 4, 12]

To improve our understanding of cognitive heuristics and bias, we propose a neural network structure for cognitive bias that explains why our brains are systematically prone to making heuristic decisions (type 1). Based on biological and neurobiological knowledge, we hypothesized that cognitive heuristics and bias are inevitable trends associated with the intrinsic characteristics of our brains. [Sources: 12]

Basically, by phrasing choices differently, you can guide people to make the choices you want. If you want them to accept your idea, you must understand that the natural tendency will be to make choices that remain confident in saving $ 10,000, rather than risking a 20% chance of failure. [Sources: 0, 8]

Three existing explanatory viewpoints associate bias in human decision making with cognitive limitations and inconsistencies between available or implemented heuristics (which are optimized for specific conditions) and the conditions under which they are actually applied. There is also a pseudo-confidence effect where confidence is only perceived. With various cognitive biases, all of them can, to one degree or another, contribute to the distortion of information. [Sources: 5, 12]

Your choice must be made before the outcome of the first stage is known. Once you learn about cognitive biases, you can start to consider them and limit their impact on the thinking of your visitors and yours. It is your prejudice blind spot that allows you to see yourself as less biased than other people. Option 1 provides a definite victory and option 2 an indefinite win. [Sources: 3, 4, 7]

Some things that we recall later make all of the above systems more biased and more detrimental to our mental processes. The tendency to do (or believe) something because many other people do (or believe) the same thing. It is most commonly studied in psychology and behavioral economics, but it is present in all walks of life. The tendency to rely too heavily on a trait or piece of information or “anchor” when making decisions (this is usually the first piece of information we get on this issue). [Sources: 4, 6]

Convincing fully rational people to make rational decisions or take rational actions will be easy. Heal B has a 1/3 chance of saving 600 people and a 2/3 chance of not saving anyone. By keeping the four problems with the world and the four consequences of our brain’s strategy to solve them, the accessibility heuristic (and in particular the Baader-Meinhof phenomenon) ensures that we notice our biases more often. Of 152 respondents, 72% recommended strategy A and 28% recommended strategy B. [Sources: 4, 6, 8, 9]


— Slimane Zouggari


##### Sources #####