Chapter 1+2

Question 1

Halo - Effect (Limitations in perception)

Answer 1

Mistake in judgement due to extension of a persons overall impressions (+ -) OR the perception if one particular outstanding trait

Example: essay from a student with “positive” names were in average evaluated better (although essays were identical)

Question 2

Priming Effect (Availability Bias)

Answer 2

Exposure to one stimulus influences the response of another stimulus

The order of info presentation influences decision

Question 3

Anchoring and adjustment (Complex Situations)

Answer 3

Benchmark to estimate the value

Def. rely too heavily on 1st offered piece of info(anchor)
Sometimes anchors are set willingly

Selective activation of compatible memories explains anchoring

Question 4

Mass defaults

Answer 4

Gives a version of offering (not the best) -> standard shipping
+ In case of absent info, easy to implement, decreases confusion, increases convenience
- Doesn’t consider indiv. Preferences, profits could be Max better

Question 5

Personalized defaults

Answer 5

Reflect indiv. preferences + better to meet customers needs

+ Tailored for demo and geographic info, update in real time
- Not easy to implement, increases risk of dissatisfaction, info must be
(need for big data management)

Question 6

No defaults

Answer 6

When the best choice of default isn’t obvious

+ Choose friendly, no risk to jeopardize consumers
- Less is more (Paradox of choice), may make bad choices, higher likelihood
of regret

Question 7

Prospect theory

Answer 7

Aim: describe the actual behavior of people (contrary to expected utility theory)

Coding: agent value layoffs (PL) compared to status quo
Decreases sensitivity

Question 8

Normative Decision Theory

Answer 8

Focus: logic decisions
Assumption: RATIONAL behavior 
Deductive approach
Constructive goal 
Closed mode,

Question 9

Basic Model: interaction between obj and sub (Objective system)

Answer 9

Interaction between obj and subj system

Objective system: R(A) + R(Z) + g(CF)
A: range of actions (set of possible actions at certain point in time)
Principal of completeness: option of doing nothing included
Principal of exclusiveness: no overlapping

Z: range con conditions (set of environmental conditions, which doesn’t depend on actions BUT influence the result)

g: maps action ai depending on condition zj leads to the result eij

Question 10

Basic model: interaction between obj and sub (subj system)

Answer 10

Info system: set of all posible info about conditions (z)
Goal system: classification of agents goals according to preferences

Decision logic: Extent Type Time Risk

Question 11

Basic principles of Decision Theory

Certainty risk uncertainty

Answer 11

Under certainty: z is known - guess outcome pretty accurate
Risk: possibilities for zi are known - almost know the outcome
Uncertainty: no further info - refer to previous experiences