Chapter 3 Flashcards
(5 cards)
What is the role of heuristics in decision-making, and when do they become biases?
Heuristics simplify decision-making by reducing the effort required and limiting the amount of information considered. However, they can turn into biases when applied inappropriately. Heuristics that work well in one context may lead to biased decisions in another.
How does the availability heuristic work, and what biases are associated with it?
The availability heuristic leads us to assess the frequency or likelihood of events based on how easily they come to mind. The two biases associated with it are:
Ease of Recall: Vivid or recent information, like natural disasters, makes us overestimate its likelihood.
Retrievability: We believe things we can easily retrieve from memory (e.g., words starting with a common letter) are more frequent than they are.
What is the representativeness heuristic, and what biases does it introduce?
The representativeness heuristic occurs when we judge something based on how much it resembles a stereotype. Associated biases include:
Insensitivity to Base Rates: Ignoring statistical likelihoods, like the high rate of business failures.
Insensitivity to Sample Size: Overlooking sample size, such as assuming percentages from small samples reflect a whole population.
Misconceptions of Chance: Believing past outcomes affect future probabilities (e.g., expecting a different outcome after a streak).
Regression to the Mean: Expecting future outcomes to mirror past extremes, ignoring natural fluctuations.
Conjunction Fallacy: Assuming a combination of descriptors is more likely than any single descriptor, which is impossible statistically.
What is the confirmation heuristic, and what biases are associated with it?
The confirmation heuristic causes us to favor information that supports our existing beliefs or hypotheses. Associated biases include:
Confirmation Trap: Seeking information that confirms our hypothesis while ignoring contradictory evidence.
Anchoring: Letting irrelevant information influence our judgment, as our mind “anchors” onto it.
Conjunctive and Disjunctive Events Bias: Overestimating the likelihood of events that all need to occur together (conjunctive) and underestimating events where only one needs to occur (disjunctive).
What is the hindsight bias, and how does it relate to the curse of knowledge?
Hindsight bias occurs when we overestimate what we “knew” before an event after knowing the outcome. The curse of knowledge means we struggle to ignore what we know when assessing others’ knowledge, leading to ineffective communication and assumptions that others understand ambiguous messages.
