Judgement & decision making Flashcards Preview

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Flashcards in Judgement & decision making Deck (22):

Expected Utility (Value) Theory

Says people are basically rational and if they have all relevant info, will make a decision that results in the max. expected utility (so rational people make irrational choices as a result of poor info or decision making skills)

Expected utility = probability*objective utility of ___


Advantages and disadvantages of Value Theory

Adv- specific procedures for determining best choice

Dis- many decisions involve payoff you can't calculate; emotions and other factors not considered by utility theory can sway decisions


Prospect Theory

Gains and losses are not symmetrical
People don't understand probabilities research shows
Utility depends on subjective gains and losses- people use a reference point that represents their current state

loss aversion- much more sensitive to potential losses than potential gains

Diminishing effect of marginal utility (wealth does not equal more value)


Decision weights (of Prospect theory)

Decision weights- people overestimate and underestimate how happy something will make them


Describe the Framing effect

Decisions are influenced by how a decision is stated or framed; can cause large shifts in public opinions- reason to counterbalance questions in experimental designs
risk aversion strategy- used when prob is stated in terms of gains (eg saving lives)
risk taking strategy- when prob is stated in terms of losses (losing lives)
losses loom larger than gains


Focusing illusion

if you focus on just one aspect of a situation and ignore other aspects that may be important (eg dating and happiness)


Is someone more likely to buy a vacation package if they:
A-passed a test
B-failed a test
C-test results not available for 2 days

Explain why

Decision-making process includes looking for justification so rationale can be presented with decision
if they don't know yet-they will suspend decision. most likely after a final answer- pass or fail.


Omission bias

tendency to do nothing to avoid making a decision that could be interpreted as causing harm; decision influenced by who will be held responsible- seeks justification



approach to studying decision making that combines psychology, neuroscience and economics
decisions influenced by emotions
biases- even when we know about them, we still make similar errors and/or decisions
emotion important- one study showed activation of R anterior insula in participants more likely to reject offers


Physiology of thinking

Decision making may depend on partially separate neural systems for dealing with potential losses and potential gains-
uncertainty- amygdala and insula
choice behavior- vmPFC
(they all communicate)


Somatic Marker Hypothesis and its 2 pathways

physiological signals ("somatic markers") and their evoked emotion associated with past outcomes & bias decision-making
2 pathways reactivate somatic marker responses:
-"body loop": changes in body that are projected to brain can evoke emotion (snake may cause fear)
-"as if body loop": cognitive representations of emotions can be activated in brain w/o being directly elicited by physiological responses (like imagining an encounter with a snake)
*brain can anticipate expected bodily changes- allowing for fast response to external stimuli w/o waiting for event to occur


Iowa Gambling Task

bad decks (big rewards/big losses/overall loss)
good decks (moderate rewards/small losses/overall win)

in normal controls- people had skin conductance change prior to choice from bad deck. claimed bad feeling

amygdala lesions- no change prior to a bad deck or after a loss card
vmPFC lesions-no change in skin conductance prior to bad deck; change AFTER a loss card


Two component systems vs Multiple systems

Traditional 2 system too simple: frontal cognitive system and limbic reward system
Multiple systems more likely- complex interactions, cooperation/competition


Problem solving strategies

Trial and error- random
Algorithmic- can be unrealistic given circumstance, always converges to a solution
Heuristic- rules of thumb, may greatly speed up search, don't always work (remember perception examples)


Availability heuristic

events more easily remembered are judged as being more probable than those less easily remembered


Illusory correlation

correlation appears to exist but either does not exist or is much weaker than assumed
- stereotypes
-related to availability heuristic because selective attention to stereotypical behaviors makes them more "available"


Representative heuristic

the probability that A comes from B can be determined by how well A resembles properties of B
Worded in a way that draws your attention to certain information and may influence your decision. Mary graduated from GU example-likelihood of her being...


Conjunction rule

probability of 2 events cannot be higher than probability of the single constituents
"Linda, 31, single outspoken bright female majored in philosophy, concerned with discrimination, and social justice and participated in antinuclear demonstrations- is it more likely she is a bank teller or a bank teller active in the feminist movement?"


Law of large numbers

the larger the number of individuals randomly drawn from a population, the more representative the resulting group will be of the entire population.


What is the difference between deductive and inductive reasoning?

Deduction- particular inferred from the general-a valid deductive argument is one in which the conclusion follows from the premises with logical necessity
eg all men are mortal, Socrates is a man, Socrates is mortal.
Induction- general inferred from particular- inductive argument is one in which the conclusion follows with some degree of probability. Never 100 % probability; conclusions are suggested


Syllogism (related to deductive reasoning)

2 statements called premises, 3rd statement called conclusion. syllogism is valid if conclusion follows LOGICALLY from its 2 premises.
Aristotle's perfect syllogism:
Premise 1- all A are B
Premise 2- all B are C
Conclusion- Therefore, all A are C
Do not confuse validity with truth- All flowers are animals- all animals can jump-therefore all flowers can jump.


When is inductive reasoning used?

to make scientific discoveries- hypotheses & general conclusions
used in everyday life- make a prediction about what will happen based on observation about what has happened in the past
"jennifer leaves for school at 7am and is on time everyday for an entire semester. She assumes she will be on time tomorrow if she leave at 7am."