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Behavioral Economics – Decision Support

   Teaching Bayesian Reasoning

             Birte Gröger
Agenda


Teaching Bayesian Method in Less Than Two Hours


1.   Bayesian Method/Inference
2.   Information Formats
3.   Teaching Methods
4.   Training Effectiveness
5.   Studies and Experiments
6.   Results and Conclusion
Bayesian Method/Inference


Bayes Rule in Theory


• Named after Thomas Bayes, published
  1763
• Describing conditional probabilities (A|B)
  given another event (B)
• Update beliefs in light of new evidence
• Transfer prior probability P(A) into
  posterior probability
Bayesian Method/Inference


The Problems


• Studies show: Bayesian inference is alien to
  human inference
   – Neglect or overweighing of base rates
     (conservatism)
   – Cognitive illusions = systematic deviations
• Studies attempting to teach Bayesian
  reasoning with no success
Information Formats


Probability vs. Natural Frequencies


• Cognitive algorithms work on information 
  information needs representation format
• Mathematical probability and percentage =
  recent developments
• Input format for human minds:
  natural frequencies
Information Formats


Crucial Theoretical Results


1. Bayesian computations = simpler, when
   information represented in natural
   frequencies
2. Natural frequencies = corresponding to the
   information format encountered throughout
   most of our evolutionary development
Information Formats


Example Comparison – Mammography Problem


 The probability that a woman
                                    Ten of every 1,000 women who
 who undergoes a
                                    undergo a mammography have
 mammography will have breast
                                    breast cancer.
 cancer is 1%.
                                    Eight of every 10 women with
 If a woman undergoing a
                                    breast cancer who undergo a
 mammography has breast
                                    mammography will test
 cancer, the probability that she
                                    positive.
 will test positive is 80%.
                                    Ninety-nine of every 990
 If a woman undergoing a
                                    women without breast cancer
 mammography does not have
                                    who undergo a mammography
 cancer, the probability that she
                                    will test positive.
 will test positive is 10%.
Teaching Methods


Overview

• Teaching: showing people how to construct
  frequency representations
• Mechanism: tutorial, practices, feedback




      Rule Training   Frequency Grid   Frequency Tree
Teaching Methods


Rule Training


• Explanation how to extract
  numerical information by computer
  system
• Translation of base-rate information
  in components of Bayes’ formula
• Insert probabilities
• Calculation of result
Teaching Methods


Rule Training
Teaching Methods


Frequency Grid


• Representation cases by squares
• Indicate squares according to base
  rates
   – Shaded percentage of population
   – Circled pluses (+) for hit rate on shaded
     squares
   – Circled pluses for false alarm rate on
     non-shaded squares
• Calculate ratio: pluses in shaded
  squares divided by all circled pluses
Teaching Methods


Frequency Grid
Teaching Methods


Frequency Tree


• Constructing reference class and
  breaking-down into four subclasses
• System: explanation how to obtain
  frequencies
• Inserting into corresponding nodes
• Calculation by dividing number of
  true positive by sum of all positives
Teaching Methods


Frequency Tree
Training Effectiveness


Evaluation

•   Explanation of program and instructions
•   Answer format/solution as a formula
•   Systematically varied order of problems
•   Scoring criteria
                   strict                 liberal

         • Match exact value      • Match value +/- 5%
         • Obscure fact that      • Increased
           participants created     possibility including
           sound but inexact        non-Bayesian
           response                 algorithms
Training Effectiveness


Measures


• Comparing solution rates

       At baseline       Immediately      About a week     1 to 3 months
      (w/o training      after training   after training   after training
        – Test 1)           (Test 2)         (Test 3)          (Test 4)




• Traditional: steep decay curve
• Expectation now: decay not as quick with
  frequency training
Studies and Experiments


Structure


        Study 1a                   Study 1b                   Study 2

• 62 University of         • 56 Free University of    • 72 University of
  Chicago students           Berlin students            Munich students
• 4 groups in 3 training   • Prevent high attrition   • Issue of used graphical
  methods and one w/o        rates with later           aids in frequency
  training as control        payments and bonus         conditions
• All 4 tests with 10        based on results         • Longer period of time
  problems each            • 2 groups with the          between Test 3 and 4
• Old and new problems       different frequency      • Use also graphical aid
• High attrition rates       trainings                  for rule training 
  (increasing # of         • Reduced number of          probability tree
  participants)              problems
                           • No attrition
Studies and Experiments


Results – Study 1a

                          • Substantial improvement in
                            Bayesian reasoning




                          • High level of transfers:
                            average performance in
                            new problems almost as
                            god as in old problems
                          • Increase in median number
                            of inferences in the
                            frequency grid condition
Studies and Experiments


Results – Studies 1b and 2




          Study 1b           Study 2
Conclusion


Teaching Bayesian Reasoning is possible

• Prove that Bayesian computations are simpler
  using natural frequencies
• Environmental change  illusions
• Idea: teach people to represent information
  according to cognitive algorithms
• Translation in representation format = major
  tool for helping to attain insight
• High immediate effects, better transfer to
  other problems and long-term stability

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Teaching Bayesian Method

  • 1. Behavioral Economics – Decision Support Teaching Bayesian Reasoning Birte Gröger
  • 2. Agenda Teaching Bayesian Method in Less Than Two Hours 1. Bayesian Method/Inference 2. Information Formats 3. Teaching Methods 4. Training Effectiveness 5. Studies and Experiments 6. Results and Conclusion
  • 3. Bayesian Method/Inference Bayes Rule in Theory • Named after Thomas Bayes, published 1763 • Describing conditional probabilities (A|B) given another event (B) • Update beliefs in light of new evidence • Transfer prior probability P(A) into posterior probability
  • 4. Bayesian Method/Inference The Problems • Studies show: Bayesian inference is alien to human inference – Neglect or overweighing of base rates (conservatism) – Cognitive illusions = systematic deviations • Studies attempting to teach Bayesian reasoning with no success
  • 5. Information Formats Probability vs. Natural Frequencies • Cognitive algorithms work on information  information needs representation format • Mathematical probability and percentage = recent developments • Input format for human minds: natural frequencies
  • 6. Information Formats Crucial Theoretical Results 1. Bayesian computations = simpler, when information represented in natural frequencies 2. Natural frequencies = corresponding to the information format encountered throughout most of our evolutionary development
  • 7. Information Formats Example Comparison – Mammography Problem The probability that a woman Ten of every 1,000 women who who undergoes a undergo a mammography have mammography will have breast breast cancer. cancer is 1%. Eight of every 10 women with If a woman undergoing a breast cancer who undergo a mammography has breast mammography will test cancer, the probability that she positive. will test positive is 80%. Ninety-nine of every 990 If a woman undergoing a women without breast cancer mammography does not have who undergo a mammography cancer, the probability that she will test positive. will test positive is 10%.
  • 8. Teaching Methods Overview • Teaching: showing people how to construct frequency representations • Mechanism: tutorial, practices, feedback Rule Training Frequency Grid Frequency Tree
  • 9. Teaching Methods Rule Training • Explanation how to extract numerical information by computer system • Translation of base-rate information in components of Bayes’ formula • Insert probabilities • Calculation of result
  • 11. Teaching Methods Frequency Grid • Representation cases by squares • Indicate squares according to base rates – Shaded percentage of population – Circled pluses (+) for hit rate on shaded squares – Circled pluses for false alarm rate on non-shaded squares • Calculate ratio: pluses in shaded squares divided by all circled pluses
  • 13. Teaching Methods Frequency Tree • Constructing reference class and breaking-down into four subclasses • System: explanation how to obtain frequencies • Inserting into corresponding nodes • Calculation by dividing number of true positive by sum of all positives
  • 15. Training Effectiveness Evaluation • Explanation of program and instructions • Answer format/solution as a formula • Systematically varied order of problems • Scoring criteria strict liberal • Match exact value • Match value +/- 5% • Obscure fact that • Increased participants created possibility including sound but inexact non-Bayesian response algorithms
  • 16. Training Effectiveness Measures • Comparing solution rates At baseline Immediately About a week 1 to 3 months (w/o training after training after training after training – Test 1) (Test 2) (Test 3) (Test 4) • Traditional: steep decay curve • Expectation now: decay not as quick with frequency training
  • 17. Studies and Experiments Structure Study 1a Study 1b Study 2 • 62 University of • 56 Free University of • 72 University of Chicago students Berlin students Munich students • 4 groups in 3 training • Prevent high attrition • Issue of used graphical methods and one w/o rates with later aids in frequency training as control payments and bonus conditions • All 4 tests with 10 based on results • Longer period of time problems each • 2 groups with the between Test 3 and 4 • Old and new problems different frequency • Use also graphical aid • High attrition rates trainings for rule training  (increasing # of • Reduced number of probability tree participants) problems • No attrition
  • 18. Studies and Experiments Results – Study 1a • Substantial improvement in Bayesian reasoning • High level of transfers: average performance in new problems almost as god as in old problems • Increase in median number of inferences in the frequency grid condition
  • 19. Studies and Experiments Results – Studies 1b and 2 Study 1b Study 2
  • 20. Conclusion Teaching Bayesian Reasoning is possible • Prove that Bayesian computations are simpler using natural frequencies • Environmental change  illusions • Idea: teach people to represent information according to cognitive algorithms • Translation in representation format = major tool for helping to attain insight • High immediate effects, better transfer to other problems and long-term stability