SPRING Decision Making

Question 1

shafir and le boef view of rationality 2002

Answer 1

largely entitles to own preferences so long as adhere to basic rules of logic and probability
not be formed on the basis of immaterial factors ie mood or contrext

Question 2

what types of decisions can we make

Answer 2

riskless
decision under risk
decision under uncertainty

Question 3

define decision under risk

Answer 3

outcome of each decision known

Question 4

define decision under risk

Answer 4

probabilities of outcome known but not true outcome

Question 5

define decision under uncertaintly

Answer 5

dont know probability or exactly what cold occur

must estimate or guess

Question 6

what is expected vaue theory

Answer 6

outcome = probability of occurance x monetary value

what you shold do based on an idealised version of the world - always a dominant right answer

Question 7

what is expected utility theory

Answer 7

outcome = probability of occurance x utility value

utility value is subective and doesnt have exact monetary value

Question 8

what is subjective expected utility theory

Answer 8

outcome = subjective probability x subjective utility value

subjective prob - not ebery situation is probabalistic - percieved likelihood of occurance when there is no set value - rely on estimates of the world

Question 9

assumptions of subjective expected utility

Answer 9

seek to maximise SEU
tansitivity of preferences
invariance of preferences
consistency = rationality

Question 10

assumptions of SEU maximise

Answer 10

wish to chose option of greatest gain

Question 11

assumptions of SEU transitivity of preferences

Answer 11

assumes choices are well order ie a>b and b>c then a>c

Question 12

assumptions of SEU invariance of preferences

Answer 12

preferences remain the same irrespective of the way the options are described (descriptive invariance), the way the choice is made (procedural invariance) or regardless of how the choice is expressed

Question 13

elimination by apects (tversky 1972) violation of SEU

Answer 13

start with most important attribute and set cut off value - all below are eliminated
continue to next attribute etc until only one option remains
- big choices

Question 14

satisficing (simon 1956) violation of SEU

Answer 14

consider one alternative at a time in the order they are presented - compared to predetermined cut off
first to pass all cut offs is selected

Question 15

violating transitivity (tversky 1969) violations of SEU

Answer 15

dont always have transitive preferences
chose between a (more social but less intelligent) or e (less social but more intelligent) chose E even though prev chose a
larger diff compared to a>b etc

Question 16

violative descriptive invariance (tversky and kahenman 1981) violations of SEU

Answer 16

framing effects
aisian disease problem - people saves chose a (least risky) but people die chose b (more risky)
more sensitive to loss so chose risk to prevent as much as possible
risk averse for gains and risk seeking for loss

Question 17

kahenman and tversky 1979 prospect theory

Answer 17

expected utility not as straight as economic choice assumes
marginal value of gains and lossess decreases with mag (ie 200 vs 300 > 1200 vs 1300)
depend on reference point (what you have adapted to ie temp) in how you judge and compare outcomes - ie object hot or cold dependent on the temp to which one has adapted (same with wealth ie pov see high gain)
eval relative to what could have happened
BUT feel loss stronger than feel gains

Question 18

coucil tax and prospect theory

Answer 18

offered rebait on council tax (gain back loss) or money for insulating homes
more chose tax back as seen as getting back loss
ie lottery lose more value

Question 19

donoval and jallen 2000 framing effects in real world

Answer 19

immunisation problem
a. 90% chance no side effect or b. 10% chance side effect
increased choice of a becuase positively framed

Question 20

violating procedural invariance (lichtenstein and slovic 1971) violation of SEu

Answer 20

given EV choce of betting
a. 99! win £4, 1% chance lose £1 or b. 33% chance win £16.67 and 67% chance lose £2
EV best choice is a by one penny
but when pay more to bet chose b - focus more on potential winnings than the highest probability

Question 21

what is percieved justification

Answer 21

violation of consistency

our tendency to want to be able to justify the decisions that we make

Question 22

tversky and shafir 1992 percieved justification

Answer 22

buy holiday, dont buy or pay £5 to postpone
group a and b pass or fail exam both buy
group c waiting for results postpone
- need reason

Question 23

what is anticipated regret

Answer 23

decisions affected by the amount of regret we anticipate as a result of possible outcomes

Question 24

what is prefactual thinking

Answer 24

linked to anticipated regret

think about what might happen

Question 25

bar hillel and neter | anticipated regret - prefactual thinking

Answer 25

give pen and swap - yes | give lottery ticket and swap - no

Question 26

hetts et al 2000 anticipated regret

Answer 26

``` car regret (car stolen if dont check) - go check car or test regret (care fine and late for test) - go to test ``` thing you think you will regret determines your decision to act

Question 27

mcconnell et al 2000 anticipated regret and purchase decisions

Answer 27

regret if buy now and cheaper elsewhere | price guaruntees - once buy stop looking and unlikely to refund

Question 28

dual process theory of decision making stanovich 1999 system 1

Answer 28

universal cog across species instinctive behaviours innately programmed reapid parallel and automatic processess ie heuristics

Question 29

dual process theory of decision making stanovich 1999 system 2

Answer 29

evolved uniquely to humans slow and sequential use of wm permits abstractthinking weighs choices

Question 30

dual process theory of decision making evans 2013 type 1

Answer 30

the source of Type 1 processing in the brain is not always in areas regarded as evolutionarily old do not required “controlled attention,” which is another way of saying that they make minimal demands on working memory resources

Question 31

dual process theory of decision making evans 2013 type 2

Answer 31

engages a singular central working memory resource, is highly correlated with fluid intelligence - involves cognitive decoupling and hypothetical thinking—which requires a strong loading on the working memory resources the feature that makes humans unique—is cognitive decoupling: the ability to distinguish supposition from belief and to aid rational choices by running thought experiments

Question 32

prob with dual processing theories in decision making evans 2013 good and bad decisions eval

Answer 32

fallacy in dual-process theories is that Type 1 (intuitive, heuristic) are responsible for all bad thinking and that Type 2 (reflective, analytic) necessarily lead to correct responses - blame Type 1 processing for cognitive biases in reasoning and judgment BUT Rationality is an "organismic-level concept" and should never be used to label a subpersonal process (i.e., a type of processing) Subprocesses of the brain do not display rational or irrational properties per se, although they may contribute in one way or another to personal fallacy that Type 1 is invariably nonnormative and Type 2 is invariably normative. BUT Type 1 processing can lead to right answers and Type 2 processing to biases in some circumstances

Question 33

dual process theory neuro evidence McClure, Laibson, Loewenstein, and Cohen (2004)

Answer 33

reported that distinct neurological systems were associated with monetary decisions made on the basis of immediate or deferred reward. In our dual-process theories, the latter would involve mental simulation of future possibilities and hence require Type 2 processing. Consistently, the authors reported that prefrontal and frontal cortical regions were activated here, whereas immediate decisions were associated with the limbic system.

Question 34

expected utility theory | characteristics of utility

Answer 34

averaged across various possible states and outcomes weighted according tho the prob of these states values must be meaningfully different for oeachother in order to make a decision

Question 35

subjective expected utility and prospect theory | le bernoulli

Answer 35

$1 a lot compared to 0 BUT $10 not sig different from $100 more willing to give away - increments in utility decrease with wealth and more risk averse

Question 36

assumptions in SEU | consistency

Answer 36

consistency in choice denotes a rational decision

Question 37

problem with elimination by aspects in failure to max SEu

Answer 37

doesnt necessitate that the best choice will be made | get overall average and may miss out on option that is better in other areas

Question 38

problem with satisfycing in failure to max seu

Answer 38

not likely to get the optimal choice | get one that satisfies all criteria but not maximises

Question 39

define framing effects

Answer 39

the way in which a choice may be affected by the order in which the info is presented to the decision maker - tendency to fixate on the way in which info is presented to us (concrete principle)

Question 40

describe the asian disease problem (violating descriptive invariance)

Answer 40

USA prep for outbreak of Asian disease a -200 save or b - 1/3 600 save and 2/3 0 saved or a - 400 die or b - 1/3 no one die and 2/3 600 die despite overall being the same relative outcomes, most chose a in save and b in die

Question 41

define the concrete principle | slovic 1972

Answer 41

people accept and use info in the way in which they recieve it

Question 42

define acceptance (k+t)

Answer 42

decision maker unlikely to recast the construction of a choice once it is presented to them

Question 43

define segregation (k_t)

Answer 43

tendency to focus on the aspects of the immediate situation that appear more relevant therefore - asian flu - fail to account for the probability of asian flu actually occuring

Question 44

johnson et al 1993 descriptive invariance

Answer 44

pref for insuranse dependent on if describe as a rebate or a deductable (pay to insurer before accident) NJ and P offer reduced insurance if give up right to sue following collision nj - no right to sue but purchase if want - 20% purchase right p - default right to sue but decline and get reduced - 75% purchase - p frame deductable as a oss and thereofre pay additional insurance even if not necessary

Question 45

problem with asian disease problem | kuberger 1995

Answer 45

outcomes often inadequately specified does not explicitly state what will happen to the other people "0 saved"

Question 46

describe the psychology of sunk costs percieved justification arkes 1996

Answer 46

tend to commit to sunk costs - people are motivated to avoid the perception of being wasteful so compromise self interest to ensure getting moneys worth BUT already paid - technically does not matter

Question 47

define omission bias

Answer 47

preferenec for inaction over action in fear of regretting choices made

Question 48

ritov and baron 1990 omission bias

Answer 48

people dont vaccinate children due to potential harm BUT subsequently increase the susceptability of the child to even more harmful disease

Question 49

vilations of failure to max SEU

Answer 49

elimination by aspects | satisfycing

Question 50

violations of invariance of preferences

Answer 50

violating descriptive invariance - framing effects | violating procedural invariance

Question 51

rothman and salovet 1977 descriptive invariance in healt behaviour

Answer 51

``` disease prevent = gain ie wear sunscreen disease detect = los ie screening more motivated to engage in health beh if gain > loss ```

Question 52

violation of consistency

Answer 52

percieved justification effect | anticipated regret