TO beleaguered man, life is an uphill obstacle course. Between the
cradle and the grave stretches an endless multitude of problems, every
one of which cries out for decision. At what moment is it safe for the
pedestrian to challenge the hazards of wheeled traffic? If a picnic is
scheduled for tomorrow, what are the odds against rain? By what
mysterious standards does a man pick a friend, a pastime, a profession
or a wife? More often than not, human intelligence seeks to resolve these and a
host of similar riddles by intuition alone. And intuition makes an
excellent guide. But it is the cardinal premise of a division of social
science called decision theory that intuition is often not enough.
Decision theory is based on the premise that man's capacity to solve
life's problems correctly is limited by two factors: in extremely
complex situations, he is not always capable of mastering all the
information, and he does not always decide as logic and reason tell him
he should. Beyond human intuition, says Psychologist Ward Edwards, lies
an individual's personal calculation of the odds in favor or against.
This personal factor, which measures the individual's will to win
rather than the mathematical probabilities, must be counted into the
risk and the odds. Money Game. Edwards, 42, is head of the University of Michigan's
Engineering Psychology Laboratory. Since last July, he has been
operating an ingenious gambling experiment called “Stakes & Odds” at
the Four Queens Hotel in Las Vegas. With the full encouragement of the
house and the Nevada State Gaming Commission, a computer has recorded
the decision-making patterns of some 250 volunteers. The game that they
are asked to play has two parts: in the first, a
player must select two bets, one good and one bad, from four that are
offered him; in the second, he has the option to keep or get rid of a
bet, depending upon how he judges its value to him. From the computer's carefully recorded data, Edwards has learned that
people on the whole make remarkably rational decisions. Nevertheless,
more than a third of the participants become befogged by superstitions,
biases and logical incoherences. Most people, for example, regard an
event as more likely to occur if they stand to lose by its occurrence
rather than gain by it. Also, they tend to inflate the value of the
money they stand to win—that is, a $10 bet means more to them
emotionally than five $2 bets. Unaffected by such emotional factors, a computer does better at the game
than people do—which does not mean that decision theorists have
contempt for man. In fact, Edwards has a profound respect for the
logical abilities of the human mind. One of the inexplicable wonders of
life is that a normal man can, with almost ridiculous ease, solve in an
instant problems of theoretically great complexity. Take for example,
ticktacktoe. Theoretically, in five moves alone this childishly simple
game can be played 15,120 different ways. Nonetheless, man easily cuts
his way through these impenetrable thickets of choice to make X's and
O's in the right combinations in order to win.
