CHP 12 - Decision Making and Behavioral Economics Flashcards

1
Q

The mistaken belief that the joint probability of two events is more probable than a single one

A

Conjunction fallacy

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2
Q

a mental shortcut that people use to judge the probability of an event based on how much it resembles what they consider to be atypical example of that event

A

Representativeness Heuristic

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3
Q

Gambler’s fallacy is?

A

“streaks” must eventually even out in order to be representative, however it is incorrect because each turn is independent to prior turn

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4
Q

People judge the frequence or probability of an event based on how easily examples can be recalled or remembered (ease of retrieval)

A

Availability Heuristic

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5
Q

The cognition bias where individuals rely too heavily on an initial piece of information when making decisions

A

Anchoring Effect

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6
Q

What is linguistic fleuncy?

A

how easily and smoothly language is processed and understood

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7
Q

What were the results of Alter & Oppenheimer (2006) results study regarding linguistic fluency and stock selection?

A

Companies with fluent names performed better at 1 day and 1 week duration

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8
Q

The likelihood to choose the more expensive option if there are three options than if there were two

A

Decoy Effect

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9
Q

T/F: A loss is more devastating than the equivalent gain is gratifying

A

True

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10
Q

is a cognitive bias where people make different decisions based on how the same information is presented

A

Framing Effect

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11
Q

T/F: We are good at predicting the intensity and duration of our response towards an event

A

False

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12
Q

T/F: We are good at predicting whether our reaction will be positive or negative in response to an event

A

True

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13
Q

What were the results of Dunn, Wilson, & Gilbert (2003) study regarding affect forecasting?

A

Both groups were equally happy in their dorm rooms despite it being in an desirable or undesirable location. Students with undesirable dorm rooms had greater misprediction

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14
Q

What are some variables that affect decision making? - four total

A

1) Gender
2) Personality
3) Age
4) Cognitive styles

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15
Q

T/F: Group decision making reduces critical thinking

A

True

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16
Q

What are some tactics companies use to reduce group thinking?

A

Devil’s advocate or kill the company

17
Q

Brainstorming groups generate _____% more ideas when the members are encouraged to criticize one another

A

16%

18
Q

Diversity of group results in different _____________

A

Perpectives

19
Q

Less is more is an examples of which type of decision making/ problem solving?

A

Heuristic

20
Q
A