Chapter 8: Language and thought (3) Flashcards
Explain the difference in problem-solving in Asian and western cultures.
Eastern Asian cultures (such as China, Japan, and Korea) display a holistic cognitive style that focuses on context and relationships among elements whereas people from Western cultures (North America and Europe) exhibit an analytic cognitive style that focuses
on objects and their properties rather than context.
________occurs when people feel overwhelmed by decisions involving a large array of options.
Choice overload occurs when people feel overwhelmed by decisions involving a large array of options.
_________ involves making choices under conditions of uncertainty.
Risky decision-making involves making choices under conditions of uncertainty.
Why do some people still gamble if they expect to lose money?
To explain decisions that violate expected value, some theories replace the objective value of an outcome with its subjective utility.
Subjective utility represents what an outcome is personally worth to an individual.
What is the availability heuristic?
The availability heuristic involves basing the estimated probability of an event on the ease with which relevant instances come to mind. For example, you may estimate the divorce rate by recalling the number of divorces among your friends’ parents.
What is the representativeness heuristic?
The representativeness heuristic
involves basing the estimated probability of an event on how similar it is to the typical prototype of that event.
(A coin toss that ends in random sequences is more believable than a straight sequence)
What is the conjunction fallacy?
The conjunction fallacy is faulty reasoning in which one believes that a conjunction of qualities or situations is more probable than just one of its conjuncts.
ex: John wears glasses. This information is more readily associated with the idea that John also reads a lot of books, rather than John does extreme sports.
What is the sunk cost fallacy?
In the sunk costs fallacy, individuals
continue a behavior because they have already invested time, money, and energy in the action or decision, not because the continuation of the behaviour itself is rational.
ex: Choosing to finish a boring movie because you already paid for the ticket
Define behavioral economics.
Behavioural economics is a field of study that examines the effects of humans’ actual (not idealized) decision-making processes on economic decisions.
What does the bounded rationality theory suggest?
Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than optimal.
For ex, people are likely to take more risks when they are happy and less likely to take risks when they are frightened. This can lead to suboptimal decisions, as people make decisions based on emotion rather than facts and logic.
Define framing.
Framing refers to how decision issues are posed or how choices are structured.
For ex, some oil companies charge
gas station patrons more when they pay with a credit card. This fee is a credit surcharge that results in a small financial loss. However, the oil companies never explicitly label it as a surcharge. Instead, they assert that they offer a discount for cash.
What is the recognition heuristic?
If one of two alternatives is recognized and the other is not, assume that the
recognized alternative has a higher value.
What are the dual process theories?
They propose dual-process theories, positing that people depend on two very different modes or systems of thinking
when making decisions.
One system consists of quick, simple, effortless, automatic judgments, which traditional theorists prefer to characterize as “intuitive thinking.”
The second system consists of slower,
more elaborate, effortful, controlled judgments, like those studied in traditional decision research.
