Cognition: Decision making

Question 1

Define decision making

Answer 1

The cognitive processes of choosing between alternative possible actions

Question 2

Distinguish between the normative and descriptive approach to decision making

Answer 2

The normative approach is the search for good ways to make decisions while the descriptive approach is trying to understand what decisions people make as opposed to what decision they should make.

Question 3

Differentiate between risk and riskless decisions

Answer 3

In decisions with risk there may be a negative outcome to one decision while in riskless decisions the outcomes of the choices are known with certainty.

Question 4

Name two different types of decisions (ways to distinguish them)

Answer 4

Single attribute (one difference between them) and multi attribute (Multi functional phones.)

Question 5

What is meant by the expected value of a decision

Answer 5

The long term average value of a repeated decision which is determined by the probability and size of the outcome.

Question 6

What minimum betting reward was found that people would accept if a coin was flipped and a loss would result in a $10 loss? What does this show?

Answer 6

$30, This shows people generally don’t follow the expected value approach in real life.

Question 7

What is meant by risk aversion and risk seeking?

Answer 7

Risk aversion means avoiding risky choices even when the expected value is higher for the riskier choice. Risk seeking means taking risky choices even when riskless choices of higher value are available.

Question 8

What is meant by utility?

Answer 8

The subjective value of an option

Question 9

What do people usually use to ‘calculate’ probability instead of the expected value approach

Answer 9

subjective probability, how likely a person believes an outcome to be irrespective of the objective probability.

Question 10

What is meant by prospect theory?

Answer 10

A decision theory stressing relative thoughts and gains

Question 11

What did Kahneman and Tversky propose monetary gambling decisions were based on?

Answer 11

Gains and losses relative to ones current wealth

Question 12

What is meant by loss aversion?

Answer 12

There is a greater dislike of loss utility than liking for gaining the same degree of utility. (prospect theory)

Question 13

What is the endowment effect?

Answer 13

When people over value an item they own, require more money to sell it than they would’ve bought it for

Question 14

Name and explain another bias in decision making

Answer 14

Status quo bias is the tendency to prefer the current state of affairs.

Question 15

What did Kahneman and Tversky’s experiment on framing potential losses against potential gains consist of?

Answer 15

Participants were either proposed problem 1 or problem 2;
Problem 1: asian disease comes endangering 600 people. Either 200 people are saved or 1/3 chance of everyone saved or 2/3 probability of no one saved
Problem 2: Either 400 people die or 1/3 chance of no one dying or 2/3 chance of everyone dying.

Question 16

What were the results of Kahneman and Tversky’s experiment?

Answer 16

In problem 1 72% of people chose 200 people definitely living whether in problem 2 78% of people took the risk. This shows that people in problem 1 were working with a gains framework and chose risk aversion while in problem 2 they were working with a loss framework and were risk seeking.

Question 17

Name and explain two probability heuristics as proposed by Kahneman and Tversky apart from the affect heuristic.What

Answer 17

Availability heuristic (judging frequency or probability of events by how easy it is to bring the events to mind) and representativeness heuristic (by how representative or typical it is of its category.)

Question 18

What is meant by the conjunction fallacy?

Answer 18

The mistaken belief that the conjunction of two events (A and B) is more likely than either one of A or B.

Question 19

What were the results of the experiment on the conjunction fallacy?

Answer 19

People were more likely to denote lida a banker and feminist than either one on its own.

Question 20

In future experiments what changed these results?

Answer 20

Stating them in terms of frequencies (how many of 100 people….)

Question 21

What is meant by the base rate?

Answer 21

The overall probability of the event in a population

Question 22

What can help people solve base rate problems?

Answer 22

Expressing them as frequencies

Question 23

Why is it thought its easier to solve these problems with frequencies?

Answer 23

They are developmentally and evolutionary prior to percentages and probabilities.

Question 24

What did Heath et al.’s survey suggest about availability bias?

Answer 24

It goes away once we are aware of it

Question 25

What is meant by the affect heuristic?

Answer 25

Substituting feelings for target attributes in decision problems. (forming emotional responses to the initial response) (nuclear plants)

Question 26

What is the effect of a positive affective response on decision making?

Answer 26

Low assessment of risk and high assessment on benefits.

Question 27

How was it shown that affective responses to alternatives can be beneficial in real life through an experiment?

Answer 27

Participants were shown 4 decks. Each card they drew they either won or lost money. After about 25 trials they could consciously report two bad decks however skin conductance recordings showed electrical spikes indicating fear when they reached for the bad decks after 13 trials. patients with daage to the ventro-medial frontal cortices of the brain do not experience affective responses and scored much lower in this experiment.

Question 28

What does the MAUT method of decision making suggest we do before making decisions? Is this a descriptive or normative approach?

Answer 28

1) identify the attributes 2) decide on a numerical weight for these attributes (importance) 3) score each possibility for each attribute 4) multiply the weight by the score and choose the highest one. This in a normative approach.

Question 29

Name an explain two more multi attribute models of decision making

Answer 29

Elimination by aspects (eliminate possibilities that do not have each desired attribute starting with the most important.) Satisficing ( setting a minimum acceptable level which will satisfy them but short of the maximum.)

Question 30

How was it tested which method of decision making we used?

Answer 30

Cards were given out with details of three houses with one turned over to reveal one was in the suburbs. Participants were then free to search property by property or attribute by attribute.

Question 31

What were the findings of this study?

Answer 31

Payne distinguished two classes of decision making;compensatory and non-compensatory. Compensatory means an overall assessment is arrived for each alternative by summing over all attribute values.(MAUT, scanning all attributes before going to the next property.)Non-compensatory requires going through each alternative in relation to a key attribute (satisficing, EBA, going through a key attribute in each property first.)

Question 32

Which method of decision making was said to be used in real life?

Answer 32

A combination as many started with non compensatory to narrow it down then made a final decision using compensatory methods. Decisions were a balance between minimizing cognitive load and maximising utility of object chosen.

Question 33

What factors influenced the decision making?

Answer 33

Non compensatory strategies increased in frequency as the complexity or time pressure increased. High conflict (high in one valued attribute, low in another) resulted in compensatory strategies while low conflict resulted non-compensatory strategies in a camera version of the study.

Question 34

Distinguish between system one and system two in regard to evolution

Answer 34

System 1 is far older and can be seen in most animals while system 2 is newer and could be special to humans.

Question 35

Name three examples of when the recognition heuristic proved more effective than conscious deliberation

Answer 35

Detroit vs Milwaukee
Man U vs shrewsbury town (score prediction)
Lay people vs financial advisors (stocks)

Question 36

What professions are fast and frugal techniques observed

Answer 36

Medicine and law

e.g rather than measuring equipment for severity of heart attack; (heart pressure, age, sinus tachycardia present.)

Question 37

What is the main difference between Gigerenzer’s and Kahneman and Tversky’s approach.

Answer 37

G- looked at adaptive value of heuristics, K&H- looked at errors in heuristics

Question 38

What is meant by consequentialism?

Answer 38

Basing decision on their expected consequences

Question 39

Name three heuristics outside of consequentialism

Answer 39

Punishment (seeing punishment as retribution rather than a deterrent and not thinking of consequences,) Omission bias (downplaying negative consequences of omissions against commissions which have the same effect) and resistance to coerced reform (despite maybe being for the better, will not vote to force people into stuff.)