Lesson 13: Decision Making

Question 1

Expected Utility Theory

Answer 1

People are basically rational
- become riskier if you’re losing money
- we don’t make decisions based on utility

Question 2

Causes of Errors in Decision Making

Answer 2

Emotions, context, decision fatigue

Question 3

Expected Emotions

Answer 3

Help us make moral decisions
- runaway trolley, footbridge w/ runaway trolley, hospital dilemma
- make decisions based on cost benefit
-not good at predicting your expected emotions

Question 4

Coin Flip Experiment

Answer 4

Overestimate negative feedback
- incorrect about how you think you will feel

Question 5

Immediate Emotions

Answer 5

Integral immediate emotions (related to a decision you’re making)
- often rejected low offers b/c they became angry that offers were unfair
- less angry with an “unfair” computer

Question 6

Decisions Depend on Context
- Status Quo Bias

Answer 6

Wanted to see if doctors who forgot about drugs would do nothing before surgery. More people did nothing with 2 drugs.
- More C-sections recommended when preceded by routine cases
- Decisions depend on context and how choices are presented

Question 7

Framing Effect

Answer 7

• Risk-aversion strategy used when problem is stated in terms of gains
• Risk-taking strategy when problem is stated in terms of losses

Question 8

Decision Fatigue

Answer 8

Tons of decisions to make = less efficient decision maker