Bounded Rationality Flashcards
satisficing
goal as threshold
consider options, which one reaches above goal in acceptable way - ie household good
Prospect theory
replaces utility with value
value
gains and losses ffrom some reference point
gain
risk aversive
lose
risk seeking
H & B
quick decisions from within their boundedly rational world
types of heuristics
satisficing representativeness availability anchoring adjustment affect
representativeness
judge probability of event based on degree to which a resembles b
linda problem, law of small numbers
availability heuristic
judgment based on ease with which instances of an occurrence are brought to mind
imagination plays a role in making event easily accessible and more impactful on judment process
AH: anchoring and adjustment
starting calues inhibit subsequent judgments even when evidence strongly suggest adjustment
affect
emotion and affect plays role in information processing and decision making, happy - top down, sad - bottom up
CRITIQUE:gigerenzer
h&B not a bad thing - humans have made progress in being logical (Evolution, cognition as a result of adaptive process not randomness)
CRITIQUE: H&B
bought into focus critical processes in human thinking, reasoning and judgment - dual process system
CRITIQUE: probelms well structured, subjects given clear alternatives
decision outside non-experimental controlled world often do not have this neat structure
multiple aternatives
different uncertainties
