Chapter 12 - Decision Making and Reasoning

Question 1

Classical decision theory

Answer 1

The earliest models about how people make decisions, often made by economists and philosophers.

Question 2

The economic man and woman

Answer 2

This theory suggests that decision makers are fully informed regarding all possible options for their decisions and all possible outcomes of them, they are infinitely sensitive to the subtle distinctions among decision options, and they are fully rational in regard to their choice of options (they make choices to maximize something of value). People often believe that they make decisions according to this model, even when they do not.

Question 3

Subjective expected utility theory

Answer 3

The goal of human decisions is to maximize pleasure and minimize pain. In doing so, we calculate subjective utility and subjective probability,

Question 4

Subjective utility

Answer 4

A calculation based on the individual’s judged weightings of utility, rather than on objective criteria.

Question 5

Subjective probability

Answer 5

A calculation based on the individual’s estimates of likelihood, rather than on objective statistical computations.

Question 6

Satisficing heuristic

Answer 6

We consider options one by one, and select an option as soon as we find one that is good enough to meet our minimum level of acceptability.

Question 7

Bounded rationality

Answer 7

We are rational, but within limits.

Question 8

Elimination by aspects

Answer 8

We eliminate alternatives by focusing on aspects of each alternative, one at a time.

Question 9

Conditional probability

Answer 9

The likelihood of one event, given another.

Question 10

Representativeness heuristic

Answer 10

We judge the probability of an uncertain event according to how obviously it is representative of the population, and the degree to which it reflects the salient features of the process by which it is generated (looks random).

Question 11

Base rate

Answer 11

The prevalence of an event or characteristic within its population.

Question 12

Availability heuristic

Answer 12

We make judgments based on how easily we can call to mind what we perceive as relevant instances of a phenomenon. People often use the availability heuristic when it confirms beliefs about themselves.

Question 13

Anchoring and adjustment heuristic

Answer 13

People adjust their evaluations of things by means of certain reference points called end anchors.

Question 14

Framing effects

Answer 14

The way options are presented influences the selection of an option.

Question 15

Illusory correlation

Answer 15

We often see events or attributes as going together, even when they do not.

Question 16

Overconfidence

Answer 16

We often overvalue our own skills, knowledge and judgment.

Question 17

Myside bias

Answer 17

We seek out information that confirms our own beliefs and disregards or ignores information that does not fit our own beliefs.

Question 18

Hindsight bias

Answer 18

We look at a situation retrospectively, and believe that we could easily seen all the signs and events that led up to an outcome. This bias can be seen as a form of memory distortion, so people with poorer working-memory capacity are more susceptible.

Question 19

Gambler’s fallacy

Answer 19

A mistaken belief that the probability of a given random event, such as winning or losing at a game of chance, is influenced by previous random events. For example, if one has had a lot of losses, it seems likely that the next will be a win. Men tend to be more susceptible to this fallacy.

Question 20

Hot hand effect

Answer 20

A belief that a certain course of events will continue in the same manner.

Question 21

Conjunction fallacy

Answer 21

Giving a higher estimate for a subset of events than for the larger set of events containing the given subset. How statistical information is presented influences how likely it is that people draw the correct conclusions from it. People who believe conspiracy theories or paranormal phenomena are more susceptible to this fallacy.

Question 22

Sunk cost fallacy

Answer 22

The decision to continue to invest in something simply because one has invested in it before and hopes to recover/justify the original investment rather than admitting defeat.

Question 23

Fast-and-frugal heuristics

Answer 23

Heuristics based on small fractions of information, and decisions are made rapidly. They set a standard of rationality that considers constraints, including time, information, and cognitive capacity.

Question 24

Opportunity costs

Answer 24

The prices paid for availing oneself of certain opportunities - what will you have to give up if you choose this particular option?

Question 25

Naturalistic decision making

Answer 25

Studying decision making in natural settings; challenges include ill-structured problems, changing situations, high risk, time pressure and a team environment. These methods allow for a focus on cognitive, emotional, and situational factors of skilled decision makers (often people working at hospitals or nuclear plants).

Question 26

Benefits of group decisions

Answer 26

Increased effectiveness, increased number of resources and ideas, and improved memory resources.

Question 27

Characteristics of groups that make good decisions

Answer 27

Small size, open communication, common mind-set among the members, group identification, and agreement on acceptable group behavior.

Question 28

Groupthink

Answer 28

Premature decision making resulting from group members trying to avoid conflict. Risks and alternatives are not examined sufficiently in groupthink.

Question 29

Janis’ three conditions of groupthink

Answer 29

1. An isolated, cohesive, and homogenous group is empowered to make decisions,
2. Objective and impartial leadership is absent,
3. High levels of stress impinge on the decision making process.

Question 30

Janis’ six symptoms of groupthink

Answer 30

1. Closed mindedness,
2. Rationalization,
3. Squelching of dissent,
4. Formation of a mindguard,
5. Feeling invulnerable,
6. Feeling unanimous.

Question 31

Reasoning

Answer 31

The process of drawing conclusions from principles and from evidence.

Question 32

Deductive validity

Answer 32

Logical soundness of reasoning.

Question 33

Modus ponens argument

Answer 33

Affirming the antecedent; a positive hypothesis - “If p, then q. P. Therefore, q”.

Question 34

Modus tollens argument

Answer 34

Denying the consequent; a negative hypothesis - “If p, then q. Not q. Therefore, not p”.

Question 35

Deductive reasoning

Answer 35

Drawing on general statements for specific logical application. Deductive reasoning is based on logical propositions (assertions).

Question 36

Pragmatic reasoning schemas

Answer 36

General organizing principles or rules related to particular kinds of goals, such as permissions, obligations, or causations.

Question 37

Syllogisms

Answer 37

Deductive arguments that involve drawing conclusions from two premises.

Question 38

Categorical syllogisms

Answer 38

The two premises state something about the category memberships of the terms.

Question 39

Inductive reasoning

Answer 39

Going form specific observations to create a general explanation and prediction of future specific instances.

Question 40

Dual-process theory of reasoning

Answer 40

Two complementary systems of reasoning exist. The first is a speedy associative system, sensitive to patterns and tendencies, and the second is a more deliberate rule-based system, which carefully analyzes relevant features. The two systems may be conceptualized within a connectionist framework: the associative system = pattern activation/inhibition, and the rule-based system = system of production rules.

Question 41

Discounting error

Answer 41

We often fail to recognize that many phenomena have multiple causes.