9.5 Flashcards
Rational Choice Theory
Classical view that we make decisions by determining how likely something is to happen, judging the value of the outcome, and then multiplying the two.
Irrational Reality
People are good at estimating the frequency of an event
However, it’s harder for people to think about probability (fractions/decimals)
This can be influenced by the way a problem is stated.
Availability Bias
Items that are more readily available in memory are judged as having occurred more frequently
Heuristics
Fast and efficient strategy that may facilitate decision making but doesn’t guarantee that a solution will be reached
Algorithm
Well-defined sequence of procedures or rules that guarantees a solution to a problem
Conjunction Fallacy
When people think that two events are more likely to occur together than either as an individual event.
Representativeness Heuristic
Making a probability judgement by comparing an object or event to to a prototype of the object or event
Framing Effects
When people give different answers to the same problem, depending on how the problem is phrased (or framed)
Sunk-cost fallacy
People make decisions about a current situation based on what they have previously invested in the situation
Optimism Bias
Human decision making often reflects the effects of optimism bias, whereby positive events are expected more than negative ones
Recent evidence suggest that optimism bias is greater than in North Americans than in individuals from Eastern Cultures
Prospect Theory
A behavioural model that shows how people decide between alternatives that involve risk and uncertainty (e.g. % likelihood of gains or losses). It demonstrates that people think in terms of expected utility relative to a reference point (e.g. current wealth) rather than absolute outcomes
People simplify available information (certainty effect).
People choose the prospect with the best value (expected utility)
People with prefrontal lobe damage do not show emotional reactions during risky decision making
Insensitive to future consequences
Greater activation here in healthy individuals
Similar effects in substance-dependent individuals
Certainty Effect
When making decisions, people give greater weight to outcomes that are a sure thing.
What part of the brain is associated with risky decision making?
Prefrontal Lobe
Grows out of an insensitivity to future consequences of their behaviour
