PSYC333 TEST 1

Question 1

What is Anchoring?

Answer 1

People estimate probabilities based on the anchor: initial value provided to them.
(A) Anchors exert “drag”
(B) Leads to insufficient adjustment

Question 2

Describe Kahamen and Tversky’s (1974) study and what their findings tell us?

Answer 2

Participants were asked: What is the percentage of African countries in the UN?
First participants spun a “wheel of fortune” which would either land on the number “65” or “10”. Once it stopped spinning participants were asked if they though the correct answer was greater or less than this random value.
They found that if it landed on 10 people tended to guess 25% and if it landed on 65 people tended to guess 65%. The difference in estimates highlights the anchoring effect where a numerical value that was chosen at random and couldn’t tell us anything useful still exerts drag over peoples judgements causes insufficient adjustments.

Question 3

What did Waskin, Kent and Hoch (1998) study tell us?

Answer 3

Waskin et al.’s (1998) study took the anchoring effect found in the laboratory and wanted to test if this effect is applicable to consumer behaviour. Their study looked at consumer behaviour in a supermarket looking at the effects of sale signs on consumer behaviour compared to weeks where the same items were not on sale,
(A) 1 for $1.00
(B) 4 for $4.00
They found in both conditions consumer behaviour went up when items were on sale however, sales went up more when the sign said 4 for $4.00 even though the number 4 doesn’t mean anything or give us information about the product but the mere presence of the number exerts influence on our purchasing decisions.

Question 4

Does the anchoring effect only apply to numerical values?

Answer 4

No, a study by Oppenheimer, Lebeuf and Brewer (2008) found that the same anchoring effect in line sizes. In their study they asked participants to trace a series of lines that were (all) either long or short. Then participants were asked to estimate the length of the Mississippi river. They found that the average estimate when asked to trace long lines was 1224 miles and 720 miles for short lines. Highlighting that anchoring is an effects that occurs across modalities- I know it’s a weird study.

Question 5

How can we get rid of anchoring?

Answer 5

You cant….
> Incentives i.e. you will earn more money the more accurate you are=doesn’t work.
>Forewarning people of anchoring effect and biased judgements=doesn’t work
>Size of anchor, giving estimates that are so extreme that they couldn’t possibly be accurate=doesn’t work judgments are still biased albeit not as much as when people are given plausible anchors.

Question 6

Which study looked at the size of the anchor or extreme initial values?

Answer 6

Quattrone et al. (1984) where participants were asked: Is the number of Beatles records which made it into the top 10 greater than or less than 100,025?
People still showed an anchoring effect- insufficient adjustment from the initial value. Even though the answer was so extreme it couldn’t possibly be real.

Question 7

Anchoring as a Process: Name the (3) explanations proposed in-class to account for this phenomenon.

Answer 7

(1) Confirmation Bias
(2) Satisficing
(3) Self-Generated Anchors

Question 8

How could the confirmation bias account for anchoring?

Answer 8

Mussweiler & Strack (1999) theorised that people tend to insufficiently adjust from initial value provided to them because they believe it may be correct and have a tendency to seek information which confirms their belief and ignore any contradictory information.
For example:
Participants were told each of the following cards will have a number on one side and a letter on the other. They were then told a rule “If the card has a vowel on one side the other will be an even number”. What cards would you need to turn over to tell if they were lying?

Note cards shown: E, K, 7, & 4.

Most people answer E & 4. This is the incorrect answer because these 2x cards can only confirm the rule, not disprove it.

The correct answer is E & 7. These are the only 2x cards which could disconfirm the rule.

i.e. the rule mentions vowels and even numbers…

If we flip the vowel over and there is an odd number on it the rule is not true.

Similarly, if we flip the 7 over and there is a vowel on it the rule is not true.

Evidence of confirmatory hypothesis testing, that people choose or weight information which confirms their hypothesis and ignore information which disconfirms it.

Question 9

What is the Satisficing theory of anchoring?

Answer 9

Satisficing theory was used to account foe Quattrone et al.’s study for which confirmation bias could not account for.

Satisficing argues that people adjust their estimate from the anchor until the hit a value which falls within their range of acceptable answers.

Answer is good enough.

e.g. Was Thomas Aquinas born before or after 800 AD?

Question 10

What study of anchoring can confirmation bias not account for?

Answer 10

Satisficing theory was used to account for Quattrone et al.’s study for which confirmation bias could not account for.

Question 11

What is the self-generated theory of the anchoring effect?

Answer 11

That insufficient adjustments occur because people are provided initial values by the experimenter. Epley and Gilovich argued that in real life people spontaneously generate anchor’s themselves to guide their estimates which can be beneficial when we need to make decisions under conditions of uncertainty.
e.g. What is the freezing point of Vodka?
People the freezing point of water which is 0 celsius as a reference and adjusts their estimates from this initial value. People tended to be quite accurate and close to the correct answer which was -20 celsius but their was still a small effect of anchoring.

Question 12

What theory accounts for why self-generated anchors can still produce anchoring effects?

Answer 12

Epley & Gilovich claim that adjustments from the anchor require EFFORT. Thus, people tend to use SATISFICING to reach an acceptable value and optimise their limited capacity.

Question 13

Two studies which proved adjusting from self-generated anchors require effort?

Answer 13

sober > drunk
No load > cognitive load
and
S=D
NL=L

Question 14

Do adjustments from experimenter-provided anchors require effort?

Answer 14

No, people do not put effort in they tend to use satisficing regardless of their cognitive load or capacity.

Question 15

Epley & Gilovich: removing anchoring effect on probability estimates with self-generated anchors:

Answer 15

Incentives > No Incentives
Forewarning > No Forewarning
and 
I=NI
F=NF

Question 16

Anchoring effects is larger when:

Answer 16

(A) Higher Ambiguity (uncertainty)
(B) Lower familiarity (of knowledge)
(C) More trustworthy source (conversational maxim)
(D) Plausible anchors (confirmation bias)

Question 17

Self-Generated anchors are effective when:

Answer 17

(A) People use effort
(B) People are motivated
(C) Aware of biases

Question 18

People show anchoring even when:

Answer 18

(A) Anchor is chosen at random
(B) Anchor size is extreme
(C) People use incentives or forewarning

Question 19

What is the Homo Economicus model?

Answer 19

An economic model which describes hypothetically what an economic man would be:
> Self-Interested
> Maximises utility and profit
> Is rational

Question 20

What is the Expected Utility Theory?

Answer 20

Model of rationality, outlines (6) principles on what an economic man should do when choosing between alternatives in order to maximise utility:

1. Ordering alternatives (preference and indifference)
2. Cancellation (decision-based on differences)
3. Dominance (pick the dominating option)
4. Transitivity (If A>B, and B>C then A>C)
5. Continuity (prefer a gamble of best and worst outcome over a guaranteed mediocre outcome)
6. Invariance (framing shouldn’t matter)

Question 21

What model opposes the Homo Erectus model?

Answer 21

Bounded Rationality. argues that rarely do people have all the information and capacity to be fully rational when making decisions. Thus, they argued a more descriptive model should be used to explain how people actually make decisions not how the should.
Key aspect of this model is “satisficing”-people tend to be content with finding an answer which is good enough i.e. optimising their limited capacity.

i.e. evidence of this is heuristics-where people violate the 6 principle of the expected utility theory.

Question 22

Examples of Heuristics that violate rational decision making:

Answer 22

(A) Representativeness
e.g. conjunction fallacy, hot hand phenomena and is jack an engineer?
(B) Availability Heuristic
e.g. famous males & less famous females
(C) Simulation Heuristic
e.g. Easy to imagine symptoms and hard to imagine symptoms.

Question 23

Steps of the PATH Model:

Answer 23

Problem
Analysis
Test
Help

Question 24

Mental Accounting

Answer 24

How people code, categories, and evaluate possible outcomes.

There are (3) non-fungible mental accounts:

> Current Incomes
Current Wealth
Future Income

Question 25

Windfall Gains

Answer 25

Windfall gains are unexpected GAINS in income which do not fit the three mentaly accounts for money (current income, wealth or future income). This is used in a consumer context for example, cashbacks or tax refunds. This money is yours, but it has already been discounted and when it gets given back to us we treat it as being "new" money. As a result people tend to more readily spend windfall money than other forms of income.

Question 26

Decision Frames (Tversky & Kahneman, 1980)

Answer 26

> The decison maker conception for each alternatives possible outcomes with regards to it's utility and consequences determines the choice in course of action made. > Whether decisions are framed as losses or gains significantly influences a decision makers choice of action. Tversky & Khaneman (1980) found that decisions framed as gains made people risk averse and when framed as a loss people's decisons tended to be risk-seeking. For example, when participants were asked: Imagine that NZ is prepearing for an outbreak of a highly contagious chest infection which is expected to kill 600 people. Two programes to contain the disease have been proposed which one would you choose? (A) 200 people are saved (B) 33.3% chance that 600 people will be saved and a 66.6% chance that 0 people will be saved. When question was framed as a gain, number of people saved people tended to be risk averse and 72% of participants picked option (A). (C) 400 people will die (D) 33.3% chance that 600 people will die and 66.6% chance that 0 people will die. When decision is framed as a loss people tended to be more risk-seeking and 78% of participants choose option (D). Highlighting that the framing of a decison significantly inflece peoples decison making and judgements. This is inconsitent with the predicited behavior of homo economoicus and the expected utilitiy theory (invariance rule).

Question 27

The Prospect Theory

Answer 27

Is a descriptive model rather than normative model of economic decison making that has vast more explanatory power to explain humans decion-making behaviors. The prospect theory replaces utility with the value of each alternative. This is determined by two things: (A) deviation from the reference point, (i.e. inital value) (B) gains and losses are crucial.

Question 28

The Endowment Effect

Answer 28

People add additional value to items that belong to them. This is demonstarted by peoples tendency to be willing to sell something the own for more money than they themsevles would buy it for.

Question 29

Chapman (1981) Similarity of exchangeable objects & endowment effect.

Answer 29

Applied study of the endowment effect on objects transactions. He examined peoples willingness to trade their crayons when the exchangable items were identical (crayons), similar (markers) or different (gum). What they found was that: Crayons 79% willing to exchange Markers 45% Gum 45% When items were not identical the percieved loss that would result from the exchange is larger than the potential benefits and we can see the additional value we hold for items that belong to us.

Question 30

Ber-Hillel & Neter (1996) (lottery ticket)

Answer 30

If given a lottery ticket... would you exchange it for another lottery ticket and a small prize? In this scenario the choice to exchange is a dominant response utility wise. However, they found that only 41% were actually willing to exchange THEIR ticket for someone elses to recieve an additional small prize. Why? (A) To lose from your own ticket is perceived as a gain forgone (B) To lose from someone elses ticket is perceived as an out of pocket loss. (C) People tend to weight the former more heavily. This highlights that people over weight the low probability of someone winning with their ticket and perceive the expected loss of giving up an item which belongs to them greater than the potential utility of gaining a dominating alternative. Example, of a behavioural trap the endowment effect causes us to perceive a beneficial outcome as negative and act loss aversive.

Question 31

Critique of the Prospect Theory

Answer 31

> Its an incomplete theory because it doesn't tell us how people spontaneously create their own frames

Question 32

Sunk-Cost Phenomenon

Answer 32

Tendency for people to continue an endeavour once investment has been spent. Sunk costs should not effect our decisions but it can because the: (A) mentally the money has already been discounted/spent (B) and we desire to not be wasteful This is not optimal decision making if you let past costs effect your current judgement. Nothing in the present can change the past!

Question 33

Knetch (1989) Mug & Chocolate fish.

Answer 33

Participants were asked: (A) if they would trade their mug for a chocolate fish = 89% stuck with their mug (B) if they would trade their chocolate fish for a mug = 56% choose to take the mug (C) If they would like to have a mug or a fish = 10% choose the mug Highlighting that when given a free choice between the two items most people vauled the chocolate more but as soon as the mug became ours majority of people when offered chocolate choose to keep the mug = Endowment effect in transactional decision making.

Question 34

What is Counterfactual Thinking?

Answer 34

How we think about past events affects how we learn and how we feel.

Question 35

What is Kahneman and Millers Norm Theory?

Answer 35

Norm theory states that: > category norms or prototypes are derived from exemplars > Specific events generate their own norms i.e. events with their own outcomes > This is achieved by events triggering the retrieval of similar experiences from memory and comparing the actual with possible outcome to evaluate its normality.

Question 36

Example counterfactual used in class that is unique from other emotions:

Answer 36

Regret: > Requires comparison of actual with better alternative reality > Different from other emotions like guilt and dissatisfaction.

Question 37

Affective Amplification:

Answer 37

Outlines the changes in affect that occur as a result of comparing actual outcome with past outcomes (possible outcomes). > States that affect is amplified ( + or - ) when the actual outcome is deemed to be abnormal AND its cause as mutable (changeable).

Question 38

Counterfactual Thinking: Emotional responses are determined by-

Answer 38

``` 1. The ease of "undoing" the event. a- closeness to the counterfactual world. b- exception (regret) vs. routine (responsibility) ``` ``` 2. The ease of "undoing" the actions leading up to the event. a- action (regret) vs. inaction b- time course: ACTION linked to more regret in the short term. INACTION linked to more regret in the long term. ```

Question 39

Two Types of Counterfactuals?

Answer 39

Upward & Downward

Question 40

Are the functions of upward and downward counterfactuals the same?

Answer 40

No. Upward counterfactuals have a preparative function. Feeling bad now to avoid it in future- If I only... do X than Y. Downward counterfactuals have an emotion regulation function. To make us feel better about a bad outcome and saying it could have been worse.

Question 41

Affective Assimilation

Answer 41

Upward counterfactuals: Produce a positive affective response. Downward counterfactuals: Produce a negative affective response. *When using an experimental or reflective mode of counterfactual thinking.

Question 42

Affective Contrast

Answer 42

Upward counterfactuals: Cause negative affective response Downwards counterfactuals: produce a positive affective response. *when the using evaluative mode of counterfactual thinking.

Question 43

Markman et al. (1993) study showed us: | Blackjack

Answer 43

Confirmed their theory that upward and downward counterfactuals serve a different function. Their black jack study showed that when comparing reality with an alternative that was positively, neutral or negatively framed.... ``` Win: (actual with better alt.) > More downward counterfactuals in both repeat (Prep. funct.) and no repeat (emot. reg. funct.) ``` ``` Neutral: > More downward in no repeat (emotion reg.) > More upward in repeat condition (prep. funct.) ``` Loss: (actual with worse alt.) > More upward in both repeat and no repeat conditions. All had more CF thinking in repeat rather than no repeat condition.

Question 44

What does Mandel (2003) study tell us about CF thinking? Function of upward CF

Answer 44

Questioned how does feeling bad now help me in the future? Found that when people were asked to recall a negative interpersonal or academic memory. Upward counterfactuals were correlated with the following emotions: ``` > Shame > Guilt > Sadness > Regret >>Control ``` I.e. that counterfactual thinking allowed them to identify mutable changes to the abnormal that could prevent this outcome occurring again in the future. Feeling bad now to avoid it latter.

Question 45

Markman & McMullen (2003) REM model:

Answer 45

Reflection and Evaluative Model. ``` Evaluative Mode: > The alternative reality was used as a reference point to evaluate how good or bad the current outcome is. > The alternative reality is then excluded and > results in affective contrast (up=sad, down=happy) ``` ``` Experiential Mode: > The alternative become a part of the actual event > and now thinking of actual event make the alt. event accessible > leads to affective assimilation. (up=happy, down=sad) ```

Question 46

Allen, Knipler & Chan (2019) applied study of CF:

Answer 46

Examined how winning athletes talked post race in their interviews. Found that silver medalists compared to bronze medalists: ``` (A) produced more counterfactuals, especially upwards. "If only I... than I could have won" (B) more opponent directed she had a good race... she was unstoppable today. ```

Question 47

Medvec, Madley & Gilovich (1995) study showed us:

Answer 47

Applied CF study which looked at the facial expressions of athletes post race. Showed that silver medalists looked less happy than bronze medalists. Why? because the distance between coming second and coming first is way smaller than between 2nd and 3rd place. This means that actual event is closer to the counterfactual world and causes affective contrast- upward CF that causes amplifies their negative affective response.

Question 48

counterfactual thinking is not linked to the...

Answer 48

internalisation of blame.

Question 49

1. ordering of alternatives

Answer 49

principle of the expected utility theory: that states a rational decision-maker will compare each alternative and form a preference hierarchy based on the expected utility from each alternative.

Question 50

2. cancellation

Answer 50

principle of expected utility theory: | > decision is made based on the differences between alternative not similarities

Question 51

3. dominance principle and 3 types:

Answer 51

principle of expected utility theory: > optimal is preferred over the sub optimal > the dominating alternative is chosen pure, mixed or weak dominance

Question 52

types of domince?

Answer 52

pure, mixed or weak dominance

Question 53

4. Transitivity

Answer 53

principle of expected utility theory which states: If A>B and B>C then A>C.

Question 54

5. Continuity

Answer 54

principal of expected utility theory that states that an economic man will prefer a gamble of the best and worst outcome over a guaranteed moderate outcome.

Question 55

6. Invariance

Answer 55

principle of expected utility theory that states that the framing of a decision in terms of loss or gains should not influence the decision among alternatives.

Question 56

Representative Heuristic

Answer 56

People make judgements based on how similar A resembles B (is representative of) e.g. if it looks like a duck and walks like a duck it probably is a duck. (A) Conjunction Fallacy as the amount of information, we have increases the probability of the events occurring decreases but the representativeness increases. i.e. the Linda problem, saying she is a bank teller and a feminist even though it is statistically less probable for someone to be apart of two categories as opposed to one. (B) The Hot-Hand People expect randomness to look random. A string of four hits/misses in a row does not look random so we assume it's not. We forget that each event is independent from one another and the base rate of the career shooters successful shots. (C) Is Jack an Engineer? We forget the base rate because as we gain more information about jack he becomes more representative of an engineer and this biases our judgements making us believe it is more likely than it actually is.

Question 57

Availability Heuristic

Answer 57

Tendency to judge the probability of an event occurring based on how quickly it comes to mind. > more familiar=more likely e.g. which is more likely to die by a shark attack or falling plane pieces? Everyone says shark attack because it is more familiar-shown on the news more but the falling plane pieces is significantly more probable cause of death. e.g. Read a list of famous people. Q: where there more females or males on the list? The list included 19 very famous males and 20 less famous females. Males were easier to recall and more familiar. This caused people to overestimate the number of males on the list.

Question 58

Simulation Heuristic

Answer 58

people judge the probability of an event based on how easy it is to imagine it. New disease "Hyposcenia-b" Q: how likely are you to contract this disease? when... (A) Symptoms were easy to imagine (B) Symptoms were harder to imagine Results found that the ease of imagining the symptoms of hyposcenia-b influenced peoples estimates. Easy to imagine symptoms condition produce higher estimates on the probability of contracting the disease compared too hard to imagine condition.

Question 59

Bounded Rationality theory

Answer 59

People very rarely have sufficient knowledge, capacity, time and motivations to engage in rational decision making all the time. Simon Herbert proposed the theory of bounded rationality which states that people do not aim to optimise but statsfice-optimize their limited capacity and resources and produce estimates which are good enough. > Descriptive Model

Question 60

What is the prospect theories account for the endowment effect?

Answer 60

Loss aversion the expected loss of giving up an item that belongs to you is weighted more than the possible gain or utility of receiving that good or money.

Question 61

Decision weights:

Answer 61

> People have a tendency to overweight low probabilities > People tend to underweight more probable events This aspect of the prospect theory curve, a descriptive model that highlights that people rely on the value of each alternative and not the probability of an alternative when making decisions.

Question 62

Mental Accounting applied to Consumer Behaviour:

Answer 62

the prospect theory states that when making a transactional decision people weight two things: (A) The Acquisition Value the money someone is willing to give up to acquire good (B) The Transaction Value the value one attaches to having a good deal

Question 63

self generated anchors are more reliable if:

Answer 63

(A) people put in effort (B) are motivated by incentives (C) aware of biases

Question 64

successive self anchoring requires:

Answer 64

(A) effort and capacity (B) use satisfying range (C) Incentives and forewarning of bias

Question 65

(5) Goals of scientific research?

Answer 65

1. description 2. prediction 3. identifying causality 4. explanation 5. control (specific to applied social psychology- what we can control so we can intervene).

Question 66

(5) scientific values

Answer 66

1. accuracy 2. objectivity 3. skepticism 4. open mindedness 5. ethics

Question 67

(6) roles of an applied social psychologist

Answer 67

``` (A) researcher (B) program designer (C) evaluation researcher (D) consultant (E) action researcher (F) advocate ```

Question 68

What is Inaction Inersia?

Answer 68

A failure to act in the second

Question 69

What causes inaction Inersia?

Answer 69

Not anchoring or an effort to reduce dissonance. Can be explained by the prospect theory... the missed opportunity of the first offer is perceived as a loss. According to their theory losses loom larger than gains. People also engage in counterfactual thinking, where they believe that the looming loss will not allow them to enjoy the second offer. Thus, people do not take the second offer and engage in inaction inersia.

Question 70

what increases inaction inersia

Answer 70

difference between size of first and second offer.

Question 71

Satisficing account for Anchoring effect?

Answer 71

Developed because the confirmation bias CANNOT explain Quattrone et al.'s study which used extreme anchor sizes and still showed an anchoring effect!!!! Statisficing theory argues that people do not aim to confirm their hypothesis that the anchor is correct but instead they have a range of acceptable answer in which they believe the correct answer falls in. Satisficing states that people adjust from the anchor until they hit the edge of their acceptable range of answers to give an answer that is good enough- and why people generally insufficeintly adjust.