Exam 3 Flashcards
(137 cards)
Normative approach
Evaluate the alternatives choose the best one, there should be a clear right answer
Bounded rationality
The notion that decision makers do not have the ability or resources to process all available info and alternatives to make an optimal decision
Programed decisons
Automatic, less thought out process, largely based on experience and intuition. Driving to school
Non programed decisions
Result of new, complex situations, problem needs to be solved, should rely on rational decisions making model
Selective perception
Our frame of reference biases how we see things. Small boy with hammer will find everything needs pounding
Projection biases
Assuming everyone else thinks feels and believes the same things we do and assuming our way of thinking wont change over time
Fundamental attribution error
Blame the person not the situation
Self serving bias
Blame the situation not ourselfs
Availability bias: retrievability
Retrieving pieces of info more quickly than other pieces as a result of sharing something in common
Misconceptions of chance
Treating independent events as a series of events and expecting a balanced pattern. If 1&2 had a then 3 wont also
Insensitivity to base rates
When presented with base rate info and specific info we tend to focus on the specific
Insensitivity to sample size
Making decisions based on data from a sample that is too small to be valid
Misunderstanding conjunctive events
We tend to overestimate the likelihood of sucess when looking at events that rely on each other
Framing effects: gains vs losses
People are more accepting of risk and taking action when the outcome is framed negativly; we aviod risk when the outcome is framed positively
Percentage vs absolute amounts
We tend to rely more on percentages than absolute amounts when determining the value of an action
Escalation of commitment
Maintaining commitment to a failing course action despite clear evidence that a negative outcome is imminent
Why does escalation of commitment happen?
Framing, people justify past decisions, competitive irrationality, emotional contagion, we have a difficult time ignoring sunk cost
Emotions and rationality
We compare out outcomes to the outcomes of others and expect equity. Perceptions of injustice=anger=emotion=overrides cognition. We reject the offer to punish the proposer and maintain perceive justice norms even at own expense
Step one to rational decision making
Define a problem issue or choice
Step two to rational decision making
Ifentify all the criteria for success
Step three to rational decision making
Weigh all the criteria
Step 4 to rational decision making
Generate all the potential alternatives
Step 5 to rational decision making
Evaluate each alternative on each criteria
Step 6 to rational decision making
Compute the value or expected calue of each alternative