Decision-making quiz

1. How would you rate your driving skills on a scale from 1 to 10 (1 is Poor, and 10 is Excellent)?

2. In the English language, are the following letters more likely to occur as the first or third letter of a word? Check the position more likely for each letter.

3. Suppose each card has a number on one side and a letter on the other. Which of the following card(s) are worth turning over if you want to know whether the following statement is false?      

“If a card has a vowel on one side, then it has an even number on the other side.”

4. Is the height of Mount Everest greater or less than 45,000 feet?

5. What is the height of Mount Everest (in feet)?               

6. Read the following description of an individual:

Intelligent

Skillful

Industrious

Warm

Determined

Practical

Cautious

Now in each of the following pairs, circle the word that best describes the above individual.

a. Generous      or        Ungenerous

b. Unhappy      or         Happy

c. Irritable         or        Good-Natured

d. Humorous    or         Humorless

e. Sociable       or         Unsociable

f. Popular         or         Unpopular

Quiz results

1. Did you rate your driving skills above five? The majority of the population does as well (87.5%, according to a study by Ola Svenson published in Acta Psychologica), with 60% ranking themselves at eight or above. Perhaps your driving skills truly are above average, but we know mathematically that it cannot be the case for everyone who makes that claim. The tendency for people to overestimate their abilities is an example of overconfidence bias. This bias affects a wide variety of self-assessments including those regarding knowledge, skills, and abilities. It even affects trained professionals in their area of expertise.

2. All five of these letters occur more commonly in the third position of a word. Did you select the first position for three or more of the letters? If so, you are in good company along with 69% of the people surveyed by Amos Tversky and Daniel Kahneman in Cognitive Psychology. How did you arrive at your answer? Most individuals brainstorm words containing each targeted letter and then select their answer based upon the number of words they have identified for each position. This process reflects the availability heuristic in which we estimate the likelihood of an event by how easily we can bring it to mind.

3. The correct answer to this question is A and 7 (the first and fourth cards) although few people identify that solution (4% in the study by Philip Johnson-Laird and P.C. Wason published in Cognitive Psychology). People most frequently select A and 4 (46%) with the next most common response being just A (28%). This exercise evidences confirmation bias, as most people select the cards that could provide supporting evidence for the statement being tested. Instead, we should examine the cards that might provide evidence contrary to the proposition. If the A card has an odd number on the other side, then vowels would not always have an even number. Similarly, if the 7 card has a vowel on the other side, it would disconfirm the theory.

Do you remain unconvinced? Many people intuitively understand the logic when it is placed in a social context. Consider using the following cards to test the statement: If a person drinks an alcoholic drink, then he or she must be over the age of 21.

The answer once again is the first card and the last card.  

4 & 5. The actual height of Mount Everest is 29,029 feet. On average, people responding to these two questions estimate a height of 42,550 feet. However, when first asked if the height is greater or less than 2,000 feet, their average response is 8,000 (according to Karen Jacowitz and Daniel Kahneman’s article in Personality & Social Psychology Bulletin). This exercise reflects the anchoring and adjustment heuristic. When estimating values, we often “anchor” our estimate around an initial estimate (even if that amount is irrelevant) and then “adjust” toward the correct answer. If we realize that 45,000 is too high, we adjust our estimate down (and away from the anchor), but we typically fail to adjust sufficiently.

6. Did you choose many of the following: generous, happy, good-natured, humorous, sociable, and popular? Approximately 80% of people did in the study by Solomon Asch published in the Journal of Abnormal and Social Psychology. The answers can be reversed by changing one word in the description. When the initial list of characteristics contains the word “cold” instead of “warm,” people describe the individual as ungenerous, unhappy, irritable, humorless, unsociable, and unpopular. This is an example of “rush to solve” in which we jump to a conclusion based on one piece of information and fail to fully incorporate subsequent data.

Did any results from this quiz surprise you? Read the full article to learn more about your decision-making process and how it relates to your work in accounting.