Chapter 13 - Decision Making

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Section 1

Question Answer
: assessing and choosing among several alternativesDecision Making
: a procedure or rule that is guaranteed to yield the correct answerAlgorithm
: a procedure that often yields the correct answer, but is not guaranteed toHeuristic
: a tendency to perform in a certain way regardless of the information providedBias
Explain Kahneman & Tversky's view on Decision making.Give enough time and motivation, people are capable of making correct, logical judgements and decisions. But in every situations, people often use simpler and quicker heuristics, and respond with a # of biases ,thus leading to frequent "errors" in judgement and decision making
What is representativeness Heuristic?When we judge that a sample is likely if it is similar to the population from which it was selected
What is Law of small numbers?When people expect small samples to resemble the populations from which they are drawn. This is fallacy.
Misperceiving random streaks as increased probabilities is known as?The Hot Hand Effect

Section 2

Question Answer
What is base rate?How often an item occurs in the population
What is likelihood ratio?Whether the description is more likely to apply to Population A or Population B
What is Bayes' theorem?Judgements should be influenced by two factors: the base rate and the likelihood ratio
What is Base-rate neglect?The tendency to ignore the overall likelihood that an event will occur, or that a case will belong in a given category. Emphasize representativeness and underemphasizes important information about base rates

Section 3

Question Answer
: the probability of the conjunction of two events cannot be larger than the probability of either of its constituent eventsConjunction Rule
: People judge the probability of the conjunction of two events to be greater than the probability of a constituent event; they judge representativeness instead of statistical probabilityConjunction Fallacy
: Estimate frequency or probability in terms of how easy it is to think of relevant examples.Availability Heuristic
When people believe that two variables are statistically related, even though there is no real evidence for the relationship. This is known as?Illusory Correlation
Give an example used in class on Illusory Correlation.The relationship between being stressed and twisting ones hair.
What is the anchoring and adjustment heuristic?When making an estimate, we begin with a first approximation (anchor) and then we make adjustments to that number on the basis of additional information
What is an example of anchoring adjustment heuristic?Court room sentences
What is the framing Effect and what can it be influenced by?The outcome of a decision, it can be influenced by: the background context of the choice, and the way in which a question is worded
What is the Expected Utility TheoryOutcomes that are desirable because they are in the person's best interest.
What is the prospect theory?When the evaluation of outcomes is defined on gains and losses rather than expected utility
In particular, people are ( ) in the domain of losses, but are ( ) in the domain of gains.Risk-Seeking in the domain of losses, risk-aversing in the domain of gains
When dealing with possible gains (for example, lives saved), people tend toavoid risks
When dealing with possible losses (for example, lives lost), people tend to seek risks
When students underestimate the amount of time (or money) required to complete a project, this is known as?Planning Fallacy
When someone states an after-the-fact judgement that something was very likely to happen, even though it was not predicted to happen beforehand. They are using:Hindsight Bias
People who tend to examine as many options as possible are known as?Maximizers
People who tend to settle for something that is satisfactory are known as?Satisficers
A person who experiences regret following a choice or more depressive symptoms is known as?A maximizer
In Barry Schwartz's (2004) Experiment, Why is more, less?More options --> led to harder time for making choices and less satisfaction with choices made
What are 3 changes that Barry Schwartz has suggested have changed the choice making contextTechnological, Economic, and cultural changes
What is syllogistic reasoning?Involves two or more (usually quantified) premises and a conclusion that may or may not follow from the premises.
What is categorical syllogism?Describes the relation between 2 categories using all, no, or some.
What is the belief-bias effect?When people make judgements based on prior beliefs and general knowledge, rather than on the rules of logic.
For conditional reasoning, What statements are valid?Affirming the antecedent, Denying the consequent
For conditional reasoning, What statements are invalid?Denying the antecedent, Affirming the consequent
If you do your homework, then you can go out and play. What Schema is used?Permission
If there's drought, then the crops will die. Which Schema is used?Causality
If an animal is a dog, then it's a mammal. Which schema is used?Class inclusion
If you come another step closer, I'll shoot. Which Schema is used?Threat
If I go to Philly, then I'll fly. Which schema is used?Means-end
If you scratch my back, I'll scratch yours. Which schema is used?Exchange
: To test a rule, you must look for situations that falsify the rule.Falsification Principle

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