8. Decision Making

Question 1

Why are perfect decisions impossible?

Answer 1

• limited info
• info is ambiguous
• time for decisions is limited
• cognitive resources are limited

Question 2

What is a heuristic?

Answer 2

‘rule of thumb’
- mental shortcuts that reduce processing demands on our cognitive systems
- allow for solutions to be made quickly rather than attending to all information and possibilities
- they produce systematic errors (biases)

Question 3

What biases and errors are heuristics responsible for?

Answer 3

• representativeness
• availability
• adjustment and anchoring
• framing

Question 4

What is availability in heuristics?

Answer 4

• properties are assessed by the ease with which instances come to mind
• can assess frequency and probability of an occurrence/event

Question 5

What is adjustment and anchoring in heuristics?

Answer 5

• different start points lead to different estimates which are biased towards the initial value
• people will make an estimate and then adjust
• irrelevant info can bias the initial estimate

Question 6

What is framing in heuristics?

Answer 6

• you make different decisions depending on how the situation was framed
• options are presented as gains/losses
• high certainty of a gain is the most probable option

Question 7

How do biases and errors vary?

Answer 7

• biases are making the wrong choice but for a reason

Question 8

What makes a good heuristic?

Answer 8

• applicable to many scenarios
• doesn’t require lots of information/effort