Lecture 3

Question 1

Judgment

Answer 1

Evaluation of evidence in order to determine likelihood, estimated numbers, guilty/not-guilty

Question 2

Decision Making

Answer 2

Selecting and taking a course of action - can be an everyday decision or a bigger decision. Judgments can serve as input for decisions

Question 3

Judgment vs decision

Answer 3

Judgment does not involve action; decision involves choosing and taking a course of action. Note that judgments may inform decisions.

Question 4

Normative Theory

Answer 4

Posits that there is a norm of how rational people ought to think and decide in an ideal world to achieve ideal outcomes. Best way to achieve - optimization.

Question 5

Descriptive Theory

Answer 5

Describes how things happen in the real world - how limitedly rational people actually think and decide in the real world to achieve less than ideal outcomes. These decisions are made via heuristics - results not perfect but sufficient.

Question 6

Prescriptive Theory

Answer 6

Prescriptive Theory prescribes how limitedly rational people can think in the real world to achieve closer to normative outcomes. The goal is to get closer to normative, but successful prescriptive models incorporate lessons for descriptive theories.

Question 7

The Monty Hall Problem

Answer 7

3 Doors and goat problem - strategy is always to switch. Very counterintuitive. The host’s deliberate action to reveal the goal behind one of the doors adds value to the other door the contestant didn’t choose.

Question 8

Bayes’ Theorem

Answer 8

P(A|B) = P(AintB)/P(B) = P(B|A)P(A)/P(B). Includes prior probabilities. Must review!

Question 9

Conjunctive Events

Answer 9

Compound events where all items must turn out correctly in order for a successful outcome. One error ruins everything. Probability gotten by multiplying all the probabilities. Less likely than any one of the parts

Question 10

Rube Goldberg Machines

Answer 10

Conjunctive events - everything must work correctly in order for the machine to work properly

Question 11

Disjunctive events

Answer 11

Compound events where only one piece must go right for a successful outcome. 1 minus probabilities of conjunctive event where all components fail. p(A, B, or C) = 1 - [(1-p(A))(1-p(B))(1-p(C))]. At least as likely as any one of the parts