Decision Making Flashcards
Rational choice theory
we make decisions by determining how likely something is to happen, judging the value of the outcome, and then multiplying the two
What are people better at: estimating frequencies or probabilities
Frequencies
Availability bias
items that are more readily available in memory are judged as having occurred more frequently
Heuristics
fast and efficient strategies that may facilitate decision making but do not guarantee that a solution will be reached
Algorithm
a well-defined sequence of procedures or rules that guarantees a solution to a problem
Conjugation fallacy
people think that two events are more likely to occur together than either individual
Base rate
the existing probability of an event
Representativeness heuristic
making a probability judgment by comparing an object or event with a prototype of the object or event
Framing effects
people give different answers to the same problem depending on how the problem is phrased or framed
Sunk cost fallacy
people make decisions about a current situation on the basis of what they have previously invested in the situation
Optimism bias
people believe that, compared with other individuals, they are more likely to experience positive events and less likely to experience negative events in the future
What can too much optimism prevent?
Taking the necessary steps to achieve goals
___ levels of optimism can be associated with ___ levels of academic achievement
Higher; lower
Prospect theory
people choose to take on risks when evaluating potential losses and to avoid risks when evaluating potential gains
What happens when an individual suffers damage to the prefrontal part of the brain?
Their risky decision making grows out of insensitivity to the future consequences of their behavior
