On Common Ground: Number 9, Fall 2001

A Seminar in "Decision-Making"

By Kate Krause

I led one of the six seminars offered by the Albuquerque Teachers Institute (ATI) during the summer of 2000. ATI sponsors seminars at the University of New Mexico for middle- and high-school teachers in the Albuquerque Public School District. Teachers exp and their knowledge in a specific discipline area and interact with each other and with UNM faculty. UNM faculty members engage in an on-going intellectual inquiry with professional educators from diverse academic and personal backgrounds.

The seminars meet for approximately ten hours each week for four weeks during June. Seminar participants then spend the month of July writing a curriculum unit, a detailed description of how substantive material from the seminar will be incor-porated into a specific course. Because these units are disseminated over ATI’s Web site (http://www.unm.edu/~abqteach) and in printed form, teachers who do not participate in the seminars can use the units also.

My seminar, Human Decision-Making: Rational and Irrational, was designed to introduce teachers to the formal decision-making tools of economics and game theory. I hoped that the seminar would be intellectually stimulating yet accessible to those with little or no technical background in economics. In addition, I wanted the seminar content to contribute materially to the courses that the participants would be teaching. Of the ten teachers enrolled in my seminar, one taught some economics. Nine di d not. Among those who did not were one drama teacher, two language arts teachers, two teachers of gifted students and several who taught students with learning and behavioral problems. Most of the participants taught several different courses, often in inter-disciplinary learning environments. What could an economist offer this diverse group?

Our common ground was our curiosity. We all wanted to learn more about what drives people to do the things they do. I was interested in gaining insight into adolescent decision-making because many of the decisions adolescents make, particularly those r egarding family planning and academics, profoundly affect adult economic outcomes. The teachers’ goals were more diverse. Some were interested in acquiring specific tools that they could use to teach better decision-making. Some were interested in choice as a character-revelation device.

Formal economic models of decision-making often begin with the assumption that people tend to make choices that leave them as well off as possible. We define rational choices as those for which the associated benefits most exceed the associated costs. While people do shop around for bargains and attempt to allocate time and energy efficiently, they also make choices that seem directly opposed to their best interests. They over-indulge, take unreasonable risks and procrastinate. This particular dichotom y — theoretic rationality and observed irrationality — is a familiar and sometimes frustrating one. The seminar participants were a rich source of anecdotal evidence that adolescents often make decisions that are not rational. The potential benefit of better decision-making skills at this critical time in students’ lives was obvious.

Teachers of students with learning and behavioral disabilities quickly recognized that they could exploit several elements of economic models. First, economists believe that each alternative must be explicitly identified in order to determine the true cost of any course of action. A student with an hour to spend might choose from among watching TV, studying, or practicing a sport or musical instrument. By choosing one activity, the student sacrifices the choices not selected. This forgone activity represents an implicit cost. Apparently many of these students believe that they “have no choice” in circumstances in which they actually do have alternatives, or they fail to recognize that some options are mutually exclusive. One teacher designed an exercise around listing all of the alternatives that a student could have chosen in various scenarios. T he task seems simple, yet for students who have trouble recognizing the implications of their own decision-making, it is empowering.

A second element that these teachers exploited was the assumption of self-interest. Students who are not easily persuaded by moral arguments can be persuaded by appeals to their own self-interest. The teachers felt that their students would be capable of modeling alternative choices using “decision trees.” These are diagrammatic representations of choices made and consequences that follow. Each choice is a branch on the tree, terminating in a list of consequences that follow if that branch is selected. Often these consequences lead to a new set of choices and new consequences. We solve these models by selecting the final outcome that best meets our objectives, and then tracing backwards along the branches that lead to that outcome. Students use the dia gram to identify each decision that would have to be made at each step along the way to arrive at the preferred outcome.

This tool is an important component in several curriculum units. These units use examples from literature, television, and movies to illustrate how decisions made early in the story ultimately determine the characters’ outcomes. Students gain practice sketching decision trees for the characters, showing the decision paths the characters took as well as showing alternative paths that would have led to different outcomes. Students then progress to diagramming decisions in their own lives. Transparent decision-making strategies addressed many of the needs of teachers of students with disabilities. The teachers of gifted students also saw these strategies as useful. Their students can face an overwhelming number of options. Clarifying these options, and specifying the consequences of each, is a valuable tool for them, too.

To use these decision algorithms, the decision-maker must clearly identify his or her objectives. While many people associate economics with financial or business decisions, behavior is often motivated by non-pecuniary goals. A person may want respect, fame, or a reputation for honesty or generosity. In addition, there is a tendency to act in ways that are consistent with one’s own self-image. For example, the cognitive dissonance that would arise if a kind person were to act selfishly imposes a psychi c cost. In the actor’s implicit cost-benefit analysis, this may tip his or her decision toward a seemingly selfless act. In considering observed behavior we carefully distinguished between self-interest and pure selfishness. We demonstrated cooperative games that could be used in a classroom to show that a reputation for trustworthiness can serve a student’s self-interest, while one for duplicity will undermine it.

We can draw inferences about a person by observing his or her choices, and can predict what that person will do in similar situations in the future. Choices “signal” underlying values and preferences. Seminar participants quickly recognized the explici t and implicit signaling that occurs in adolescent social groups. In addition, those who taught drama and writing saw that their students could use this concept to add depth and realism to fictional and dramatic characters.

The drama teacher chose Henrik Ibsen’s A Doll House to impress on her students the importance of motivating a character’s actions. In this play each main character evolves through a series of decisions that he or she makes. While the characters’ situations change considerably over the course of the play, the changes are credible because the choices that led to those changes seem consistent with the characters’ underlying personalities. Exercises in her unit include acting out the play given diff erent initial decisions and diagramming alternative plot lines.

A creative writing teacher despaired that her students wrote action sequences enthusiastically, but did not develop clear, credible characters. Well-drawn fictional characters reveal much about themselves through the decisions that they make. In subsequent scenes, these characters must act in ways that are internally consistent. The decision-making models gave this teacher ex plicit tools that she could use to help her students develop characters with whole personalities. Her unit includes a simulation that asks students to identify specific character types from subtle clues and to describe the kinds of choices each might make .

A home economics teacher designed a unit specifically for students who need help making appropriate life-style decisions. Many of the students in her class are teenaged parents facing crucial relationship, financial, and health choices. Her unit identifies several common miscalculations that can lead to sub-optimal decisions. Her students tend to make “time inconsistent” decisions, placing too much weight on the present and discounting costs and benefits that will accrue in the future. Procrastination is the archetypal time inconsistency problem. Students sometimes make poor decisions when they do not use information objectively. Her unit points out the consequences of poor decision-making, and helps her at-risk students develop better decision-making strategies.

Despite the participants’ diversity, common issues emerged. Among these were the importance of incentives in motivating choice and the empowerment students can gain by learning specific decision-making tools, particularly those that appeal to their own self-interest. We became more careful observers of subtle nuances of human behavior as we became more aware of character-revealing cues. We debated the merits of limiting decision-making freedom and the extent to which people should be rescued from unfor tunate outcomes of their decisions.

Seminars like this one are costly. The benefits are harder to quantify. The teachers ingested a large volume of information about economics, and within weeks were comfortably using jargon and applying economic models to their own, and their students’, decision-making processes. Each teacher-participant developed a curriculum unit that addressed specific state and district level curriculum standards in in-novative ways. However the benefits of participating transcended this discipline-specific information acquisition. Participants used new information to forge links among known concepts and across disciplines. We m et regularly in a cooperative, intensively academic atmosphere to learn more about the human condition. We learned new ways of thinking about ourselves and our own disciplines. We helped each other develop creative ways to teach practical decision-making skills to those who need them most. For me at least, the benefits far outweighed the costs.

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