Class 22

Question 1

common assumptions about decisions

Answer 1

• Decisions are consistent
• Generally we are aware of what we know and what we do not know
• Decisions are improved with more information
• Generally we are risk averse

Question 2

common anomalies/biases in how we actually make decisions

Answer 2

Framing
Retrievability/Availability
Anchoring
Bounded awareness

Question 3

Dual Process Model

Answer 3

• System 1 = automatic, intuitive, impulsive, ever-present

- System 2 = calculating, rational, plodding, effortful

Question 4

Framing

Answer 4

the way we define the decision to be made. Think of a picture frame, which is a lens

Question 5

framing-what to do

Answer 5

• Restate/reframe the issue before making a decision.Work towards neutral representations.
• Recognize the influence of gains versus losses; most effective concessions are those that reduce the opponents losses, not improve an attribute in which the opponent is already “in the gains.

Question 6

retrievability/availability of info

Answer 6

• People assess the frequency, probability, or likely causes of an event by the degree to which instances of that event are readily “available” in memory
• Often appropriate because it helps us remember what is most common.
• However, also often influenced by elements that may lead to inaccuracy, such as vividness of the situation in our mind: earthquake, airplane, the instance we got into trouble, etc.
• Salience and emotional impact affect judgments

Question 7

retrievability/availability of info examples

Answer 7

• Memory/emotional experiences
• Sample size
• Base rates
• Conjunction fallacy

Question 8

anchoring

Answer 8

People start with an implicitly suggested reference point (the “anchor”) and make adjustments to it to reach their estimate. A person begins with a first approximation (anchor) and then makes adjustments to that number based on additional information

Question 9

anchoring-what to do

Answer 9

• Ask yourself what is your estimate beforehand

- Ask yourself about a confidence interval (range)

Question 10

bounded awareness

Answer 10

• The phenomenon by which individuals do not “see” and use accessible and perceivable information during the decision-making process, while “seeing” and using other equally accessible and perceivable information.
• Often caused by focusing on other items
• Also due to lack of attention to other parties.