Book part 1 Flashcards
1
Q
The concept of a nudge
A
- Choice architecture aspects that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives
- Provide the key to predictability altering people’s behavior without forbidding ay course of action outright of signficantly changing their intentive structures
2
Q
Libertarian Paternalism
A
- People should be free to do whay they want and opt out if they want
- Libertarian = choice-perserving and opting out is easy
- Paternalism = effort to protect people against their own errors by guiding them to choices they would make if they were fully informed and free from biases
3
Q
Misconceptions on human decision-making
A
- It’s possible to avoid influencing people’s choices
- Paternalism always involves coercion
- Governments steer citizens choices to manipulate because they use scientific evidence for their own policy
4
Q
Choice architecture
A
Organizing any context in which people make decisions
5
Q
Dual systems
A
- Automatic system
- associated with oldest part of our brain
- gut feeling
- you can always access it
- relying on it can guide you to the wrong decision, but not always
- not less superior, it’s older revolutionary, adaptive and lets us make quick decisions for survival - Reflective system
- conscious thought
- requires access to capacity-limited central working memory recourse
- can be disrupted by concurrent memory load
- correct impulsive chocies, empower people and lead to better decision making
6
Q
Anchoring heuristic
A
Cognitive bias where individuals rely on an initial piece of information when making decisions
7
Q
Example of anchoring heuristic
A
- When customers are presented with tipping options like 15%, 20%, or 25%, the presence of higher percentages anchors their perception of what is “normal” or “appropriate,” often leading to higher tips
- The anchor shifts expectations upward, even if a lower tip might have been acceptable without the prompt
- At McDonald’s, for example, a burger is commonly paired with fries and a drink as a “default” combo. This framing anchors the customer’s thought process to include these items, increasing the likelihood of purchasing the combo rather than only the burger.
8
Q
Representativeness heuristic
A
- We judge how likely it is that A belongs to category B by thinking how similar A is to our stereotype of B
- Ignoring base rates
9
Q
Example of representativeness heuristic
A
- 20% play chess and 80% play soccer.
- Peter is in the class, has glasses and reads books.
- How likely is it that Peter is in the chess group?
- Or chess is 80% and soccer is 20%?
- People give the same answer in likability.
10
Q
Availability heuristic
A
- People assess the likelihood of risks by asking how readilu examples come to mind
- Accessibility and salience are closely related tp availability]
- Overestimating the probability of recent or dramatic harms and to underestimate the probability of subtle or unfamiliar harms
- Risk-related behavior
11
Q
Example of availability heuristic
A
- If you experienced a flood, you’re more likely to believe a flood is likely to happen
- Governments allocate resources in a way that fits people’s fears rather than in response to the most likely danger
- Travel insurance affects heuristic (substituting fear): people are more willing to pay for a more fearful situation
- If something is recent, familiar, personal and important, it makes it easier (salient) to remember and retrieve.
12
Q
Overconfidence
A
- Poeple tend to have self-serving biases through which they focus on their strenghts while overlooking or rejecting their faults
- People underestimate how long it takes them to get things done
13
Q
Optimism
A
People are unrealistically optimistic which explains risk-taking
14
Q
Framing effects
A
- People’s decisions are influeced by how information is presented, rather than the information itself
- Individuals often rely on fast decision-making processes rather than reflective, analytical thinking they can be swayed by subtle changed in wording or context
15
Q
Example of framing effects
A
- When presenting medical treatment options, people are more likely to choose an option described positively (e.g., “90% chance of surviving”) than negatively (e.g., “10% chance of dying”), even though both convey the same probability.
- Positive framing emphasizes gains or benefits, triggering optimism, while negative framing highlights losses or risks, triggering fear or aversion.
