Cognition Chapter 10 (Decision Making)

Question 1

What is the case study of the yacht Mignonette

Answer 1

It’s a case where 4 people were stranded on a life boat and decided to eat a member. They got imprisoned after.
This is interesting because they had to make a hard decision

Question 2

What is the normative approach when decision making

Answer 2

It is the classical method
You attach a value to each outcome.
You also assess it’s probability
Value*probability=expected value

Question 3

What are the problems in the normative approach

Answer 3

• How do you know the values and probabilities (heuristic does not always learn, algorithms are better)
• How do you know all possible events
  Example here is the birthday problem or sea level estimate

Question 4

What is the fast and frugal heuristic

Answer 4

When you make decisions based on familiarity
People often make wrong judgements about probabilities of dangers and overestimate small probabilities while underestimating large ones.
Kahnemann looked at this

Question 5

What is the representativeness heuristic and a conjunction fallacy

Answer 5

When people make fast easy wrong decisions
Janine is more likely a psychology student than a student
Conjunction fallacy is when people believe that A and B happens more often than either A or B

Question 6

What is the availability heuristic

Answer 6

The speed at which you can think of some examples determines your judgment of the probability
Sharks are more dangerous than cars

Question 7

What is the base rate and why do people forget about it

Answer 7

Large scale testing can be wrong because the probability that it’s wrong is still big
Very often then more people are wrongly diagnosed (specificity) than correctly diagnosed (sensitivity)
The base rate is the amount of people where the condition is met in the population
There is the specificy and sensitivity
This can be calculated with the Bayesian theorem or with frequencies

Question 8

What is the multi attribute utility theory (MAUT)

Answer 8

It distinguishes between attributes (important aspects) and assigned weights (importance) to them.
Add values to each alternative
–> calculate expected value (overall utility)

Question 9

What is satisficing

Answer 9

Taking the first option that meets your criteria (good enough)
The partner you choose is simply good enough cause you can’t go through all of them

Question 10

What is elimination by aspect (eba)

Answer 10

1. Choosing an attribute (aspect)
2. Eliminate all options that dont meet aspect
3. Choose next aspect
4. Repeat
   - -> order is important

Question 11

Compare MAUT and EBA/Satisficing

Answer 11

Maut is compansable (ersetzlich) in comparison to EBA/Satisficing but takes longer
–> a combination is often best

Question 12

What is subjective utility

Answer 12

People are often led by subjective value rather than expected value
The more money you have the less you care about a single euro
This is why people play lottery (subjective value is very high)

Question 13

What is positive and negative framing

Answer 13

In positive framing people tend to avoid risks

In negative framing people tend to take risks

Question 14

What are framing effects

Answer 14

The way a dillema is formulated can have a strong influence on the outcome
Then there is no invariance
Its important to look at formulation when you want to persuade someone

Question 15

What su the affect heuristic

Answer 15

When you frame with emotions

When you present positive or negative facts it influences choices

Question 16

What is the prospect theory

Answer 16

It takes the irrationality in account
Basic idea is loss aversion
The decrease of utility as a consequence of loss is bigger than the increase of utility as a consequence of equal gain

Question 17

What 3 other aspects should be looked at in decision making (breaches of consequentialism)

Answer 17

1. Guilt (omission bias)
2. Retaliation/revenge (prison makes people worse)
3. Fairness (ultimatum games) (people in countries with less equality declines

These may be irrational but human

Question 18

What are the 2 systems in thinking when making decisions

Answer 18

System 1: Heuristics and fast pobability estimation (often right but sometimes not)
System 2: Algorithms with a step by step solution procedure (only available recently for humans)

Question 19

Define decision making

Answer 19

Decision making is the cognitive process of choosing between alternative possible actions

Question 20

What is the endowment effect and status quo bias

Answer 20

When people dont want to sell something even for a higher value than they got it because of loss aversion (because of pain of losing)
When people dont tend to continue in same investements even though its bad

Question 21

How do you present something (like a pizze choice) when you want to people to agree to a risky procedure

Answer 21

You present it with “30% chance of win”.

If you want people do not engage in risky behaviour you present it as “70% of losing”

Question 22

What are somantic markers

Answer 22

Emotions that alter decision making.

They can be bad and subjective even though they help in risk identification

Question 23

Which brain parts do the system 1 and 2 thinking occupy

Answer 23

1: limbic system
2: lateral prefrontal cortex

Question 24

Why do older people make worse financial decisions

Answer 24

They overemphasize on potential benefit and care less about financial loss than young people (less activation of insula (bad emotions) and more variability in activation of nucleus accubens (risk reasoning)
Also, memory and analytic reasoning goes down with age