Imagining Decisions: Likelihood and Risk Assessment in Counterfactual and Future Thinking

**Accepted for Poster presentation**


Conference: Annual Conference for the Society for Judgment and Decision Making 2016

Title: Imagining Decisions: Likelihood and Risk Assessment in Counterfactual and Future thinking

Abstract: Imaginative thinking is a way to try and mitigate against cognitive biases that lead to poor decisions (Montibeller & Winterfeldt, 2015). However, remembering the past; imagining the future; and wondering what might have been share phenomenological, cognitive and neural mechanisms leading to similar biases (De Brigard, Addis, Ford, Schacter, & Giovanello, 2013; Schacter, Addis, & Buckner, 2007). Understanding how individuals assign likelihoods to imagined decisions is critical to assessing the degree to which these mechanisms represent either a cognitive bias or a rational response to options.

To this end, I consider relationships between emotion, vivacity, and perceived risk on both the number of genuine options we consider and the probabilistic breadth of those options. One concern is that people’s judgement of likelihoods may be spurious. That is to say, episodic counterfactual thinking and episodic future thinking involves likelihood attributions based on emotional priorities and biased risk assessment rather than statistical likelihoods or rational probabilities. Positivity, optimism and narrative bias have all been shown pervade counterfactual and future thinking (Betsch, Haase, Renkewitz, & Schmid, 2015; De Brigard et al., 2013). In particular, people avoid ‘upward’ counterfactuals—considering positive outcomes that could have occurred) that may devalue their actual decisions and make them feel worse, yet offer alternatives for better future decisions (Markman, McMullen, Elizaga, & Mizoguchi, 2006).

From this I hypothesise that unfamiliar, yet potentially transformative options are suppressed when we imagine what could have been, allowing mundane anticipated outcomes rise to the fore. I propose a decision framework to free imagined decisions. The framework captures episodic memories of decisions (details, phenomenology, thoughts, emotions) and feeds them into how we represent alternate and future scenarios. Why—to get more buy-in for speculative imagined possibilities, in particular to make possibilities more vivid. The claim is that the more buy-in we can get to the imagined, the more likely information will positively influence decision-making behaviour. Then we expose decision makers to novel options and scenarios building on their own experiences, increasing the vivacity and weighting of unfamiliar, yet rationally important options and reducing the negative affect associated with familiar, yet critical realities.

In sum, this paper articulates how to construct an information environment that: acknowledges shared cognitive mechanisms of episodic counterfactual thinking and episodic future thinking; predicts how these processes affect rational decision making; and mitigates against cognitive biases by promoting behaviours likely to generate more rational information analysis.

Betsch, C., Haase, N., Renkewitz, F., & Schmid, P. (2015). The Narrative Bias Revisited: What Drives the Biasing Influence of Narrative Information on Risk Perceptions? Judgment and Decision Making, 10(3), 241-264.

De Brigard, F., Addis, D. R., Ford, J. H., Schacter, D. L., & Giovanello, K. S. (2013). Remembering what could have happened: neural correlates of episodic counterfactual thinking. Neuropsychologia, 51(12), 2401-2414. doi:10.1016/j.neuropsychologia.2013.01.015

Markman, K. D., McMullen, M. N., Elizaga, R. A., & Mizoguchi, N. (2006). Counterfactual Thinking and Regulatory Fit. Judgment and Decision Making, 1(2), 98-107.

Montibeller, G., & Winterfeldt, D. (2015). Cognitive and Motivational Biases in Decision and Risk Analysis. Risk Analysis, 35(7), 1230-1251. doi:10.1111/risa.12360

Schacter, D. L., Addis, D. R., & Buckner, R. L. (2007). Remembering the past to imagine the future: the prospective brain. Nature Reviews Neuroscience, 8(9), 657-661.

Cognitive Decision Scientist

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S. Kate Devitt

Research Associate, Institute for Future Environments and the Faculty of Law, Queensland University of Technology