Decision-making

Question 1

reasoning

Answer 1

drawing new conclusions from existing information, a prerequisite for making decisions
a higher-order process that involves other areas of cognition (attention, memory, perception)

Question 2

premises

Answer 2

estimates about whether certain facts about the world (propositions) are true or not

Question 3

propositions

Answer 3

any statement that can be true or false
refers to properties about the external world

Question 4

deduction

Answer 4

conclusion follows logically from premises
using general theories to reason about specific observations (reasoning toward information, making predictions based on theories)
formal system for generating statements that will be true if the rules of the system are followed

Question 5

induction

Answer 5

generalizing from a set of information and extending it to make an informed guess, involves interpretation (forming a hypothesis based on evidence - could be false)
making predictions for the future based off what happened in the past (could become a heuristic if we over-generalize)
basis of learning - applying learned rules to new situations, language learning, making associations

Question 6

syllogism

Answer 6

conclusion is derived from two or more propositional statements (deductive reasoning)
premises are presumed to be true, determining if the premises support the conclusion based on logical structure, not content
each premise shares a term with the conclusion and both premises share a middle term that is not present in the conclusion

Question 7

categorical syllogism

Answer 7

three statements - two premises and a conclusion

Question 8

fallacy

Answer 8

an invalid syllogism

Question 9

what is the difference between a valid syllogism and truth?

Answer 9

valid only indicates that the conclusion follows logically from the premises
whether or not a syllogism is true depends on whether the premises are true

Question 10

decision-making

Answer 10

choosing a specific course of behavioural actions from among multiple possibilities

Question 11

expected utility hypothesis (EUT)

Answer 11

people will choose the option with the highest expected value (people are rational and pursue the logical course of action related to their goals)

Question 12

what is the problem with the expected utility hypothesis?

Answer 12

people are often irrational and can be induced to make systematic errors

Question 13

neuroeconomics

Answer 13

combines economics, psychology, neuroscience to understand why humans make the choices they do

Question 14

belief bias

Answer 14

tendency to rate syllogisms as valid because their conclusions seem believable
bringing in our prior knowledge instead of reasoning based on structure - people have difficulty reasoning with syllogisms in which logical validity interferes with truth (and people are unwilling to accept unbelievable syllogisms)

Question 15

when are people more likely to fall for the belief bias?

Answer 15

when made to work through syllogisms quickly - when they have more time to evaluate validity, they are less likely to determine it based on believability

Question 16

atmosphere effect

Answer 16

people rate a syllogism as valid when the qualifiers (some, no, all) in the premises match those in the conclusion

Question 17

mental models

Answer 17

mental simulation of the world based on the description of the syllogism (visualizations of the sentence to see if it breaks down)
the reason why negative statement syllogisms are difficult to reason with; difficult to imagine the absence of something

Question 18

conditional/hypothetical syllogism

Answer 18

conditional claim, rule that relates two propositions (if P, then Q - where P is the antecedent proposition and Q is the consequent proposition)

Question 19

modus ponens

Answer 19

affirming the antecedent: if the antecedent is true, then the consequent must also be true
(It is Tuesday, therefore I have class)

Question 20

modus tollens

Answer 20

denying the consequent: if the consequent is false, then the antecedent must also be false
(I do not have class, therefore it is not Tuesday)

Question 21

affirming the consequent

Answer 21

if the consequent is true, then the antecedent is also true - INVALID
I have class, therefore it is Tuesday (you could have class on other days)

Question 22

denying the antecedent

Answer 22

if the antecedent is false, then the consequent is also false - INVALID
It is not Tuesday, therefore I do not have class (you could have class on other days)

Question 23

confirmation bias

Answer 23

tendency to look for information that supports a hypothesis rather than evidence that falsifies it

Question 24

generalization

Answer 24

type of inductive reasoning, we extrapolate about a limited set of observations to draw a conclusion about a broader population/category

Question 25

statistical syllogism

Answer 25

type of induction, we infer something about an individual based on observations from a group

Question 26

argument from analogy

Answer 26

type of induction, we assume that two things share a set of properties, so they must share a different property

Question 27

one-shot learning

Answer 27

a concept is learned from a single example (requires inductive reasoning)

Question 28

Bayesian inference

Answer 28

mathematical model for incorporating existing beliefs (prior) with new data to make an educated inference (may be unconscious)

Question 29

heuristics

Answer 29

inferential system not based on mathematics or logic, but mental shortcuts that allow us to skip careful deliberation of evidence in order to draw an inference

Question 30

System 1 vs. System 2

Answer 30

S1: quick, automatic, relies on heuristics - can result in impulsive, emotional, optimistic judgments (following first impressions and intuition), uses the limbic system
S2: deliberate and logical, takes cognitive resources - turning to S2 to make decisions can help avoid mistakes, uses the frontal cortex

Question 31

availability heuristic

Answer 31

tendency to rely on information that comes to mind more quickly (salience) when trying to make a decision (ease of retrieval = judged to be more frequent)

Question 32

what makes events more salient for heuristics?

Answer 32

examples are personal (do you know someone who died in a car accident = more frequent)
reported in the news (more coverage = more frequent, media tends to report sensational stories)

Question 33

affect heuristic

Answer 33

tendency to overestimate the frequency of events which generate strong emotional reactions (like a sense of dread - people are afraid of sharks because they inspire dread)

Question 34

anchoring and adjustment heuristic

Answer 34

tendency for people to focus and rely on initial pieces of information
even if the initial information is unrelated (spinning a wheel, then guessing the number of countries)
impact of the starting point on a Likert scale

Question 35

representativeness heuristic

Answer 35

tendency to rely on the fact that a person/object conforms to a specific category while neglecting other information/reasoning
related to stereotypes, overuse of schemas, prior knowledge which we use to infer something about an exemplar - use similarity to group to judge membership

Question 36

conjunction fallacy

Answer 36

people assume that two specific conditions are more probable than either single condition
based on the representativeness heuristic (because the exemplar matches out schema, we violate a basic probability rule)

Question 37

base-rate neglect

Answer 37

people ignore the underlying probability of an event in favour of other evidence
bias based on the representativeness heuristic

Question 38

cultural cognition

Answer 38

people hold beliefs about risks consistent with their social and moral values

Question 39

results of experiment of cultural cognition by Kahan et al.

Answer 39

those with hierarchal and individualistic views tended to consider climate change a smaller risk, and nuclear energy production a higher risk than those with egalitarian/communitarian views (their worldviews also influenced what they thought the scientific assessment of these issues was)
people tend to ignore contradicting information or become even more entrenched in their views

Question 40

optimism bias

Answer 40

people tend to overestimate the probability of positive events happening to them
not present in depressed people (and related to severity of symptoms - mild = no optimism bias, severe = pessimism bias)

Question 41

evidence for the optimism bias

Answer 41

people underestimated the likelihood of being infected by COVID compared to the general population (and this was related to their underusing preventative measures)

Question 42

loss aversion

Answer 42

people prefer to avoid losing something vs. not gaining something of equal value (the amount you could win has to be almost double what you could stand to win for people to take the risk)

Question 43

endowment effect

Answer 43

people place a higher value on things they own over things they don’t own yet

Question 44

IKEA effect

Answer 44

tendency for people to value items they created/built over items they bought or received

Question 45

status quo bias

Answer 45

tendency to leave things as they are rather than making a change

Question 46

framing effects

Answer 46

people make decisions based on how the question is framed (positive - people saved or negative - people die) - shows irrationality/inconsistency in decision-making (if classical economic theories are correct, people should make the same decision no matter the framing)
people are risk-averse when options are framed as gains (go with the safe option)
people are risk-seeking when options are framed as losses (can tolerate uncertainty)

Question 47

integral emotions

Answer 47

those directly related to the decision (like feeling anxious about the decision to ask someone out) - can be useful and lead to sub-optimal choices

Question 48

incidental emotions

Answer 48

those not related to the decision, but happen to be the state of the person at the time of making the decision

Question 49

basis of retail therapy

Answer 49

People are more likely to make a purchase when in a negative mood - and this purchase can have a lasting positive effect

Question 50

effect of negative incidental emotions on decision-making

Answer 50

People in a negative mood are more motivated to change something - if you own something, you want to get rid of it and if you don’t own something, you want to get it

Question 51

ultimatum game and results

Answer 51

proposer must offer a way to split a sum of money to the responder; in case of rejection, both get nothing
rationally, the responder should accept any proposal (any money is better than none), but in reality, they reject any proposal below a 7:3 ratio (the lowball offer is so unfair that they want to punish the proposer)
Strong emotions (outrage) affect decision-making

Question 52

brain regions in decision-making

Answer 52

sensation and perception, STM and LTM, attention
ventromedial prefrontal cortex

Question 53

ventromedial prefrontal cortex (vmPFC) role in decision-making

Answer 53

lesions lead to the person not taking into account long-term effects of decisions (they are able to reason about socially and morally correct behaviours, but do not choose them)
important in delay gratification

Question 54

somatic marker hypothesis

Answer 54

• vmPFC is involved in associating emotional reactions with certain behaviours (vmPFC could elicit the emotional states that might occur based on the outcome of a choice)
• the emotion will become an integral part of what decision you make (without the vmPFC you might make more rash impulsive, risker decisions because of a stunted emotional response)

Question 55

delay gratification and associated research

Answer 55

put off short-term reward for the long-term reward
Stanford Marshmallow Experiment: have one marshmallow now or two later - ability to wait could predict better academic success, less drug use, lower levels of aggression and rejection by peers

Question 56

nudge theory and examples of how to use biases

Answer 56

encouraging people to make certain behavioural decisions by introducing small changes in their environment
opt-out instead of opt-in - using status quo bias to stay with the default opt-in choice
loss aversion is adding a surcharge for using a grocery store bag rather than giving a discount to people who bring their own

Question 57

bias

Answer 57

deviations from rationality (errors) that are caused by using heuristics - systematically inaccurate choices that don’t reflect the current situation

Question 58

three categories of heuristics

Answer 58

1. bias how we interpret information
2. bias how we judge frequency of events
3. bias how we make predictions

Question 59

regression to the mean

Answer 59

when a process is somewhat random (doesn’t have a perfect correlation), extreme values will get closer to the mean when measured a second time
related to reward and punishment in reinforcement learning

Question 60

illusory correlation

Answer 60

we tend to see causal relationships even when there are none when we see events co-occurring

Question 61

bounded rationality and its effect on people

Answer 61

people are limited by environmental constraints (time) and individual constraints (cognitive resources, working memory, attention)
so people are satisficers: look for ‘good enough’ solutions to conserve cognitive resources (basis of why we use heuristics)

Question 62

ecological rationality

Answer 62

sees heuristics not as ‘good enough’ (bounded rationality), but as the optimal approach - they were developed under certain conditions because they give rise to better solutions than other strategies

Question 63

example of ecological rationality

Answer 63

investing - the heuristic 1/N (equally dividing assets) is a better strategy than other complex optimization algorithms (which take longer, more effort, and don’t necessarily produce better results)

Question 64

Which is not true of heuristics and biases?
(a) the conjunction fallacy arises because of the availability heuristic
(b) regression to the mean only happens when there is a non-perfect correlation
(c) heuristics can sometimes give the right answer
(d) people use heuristics because we are boundedly rational

Answer 64

A: the conjunction fallacy arises from people using the representativeness heuristic

Question 65

types of decision-making

Answer 65

perceptual: objective (externally-defined) criteria for making your choice
value-based: subjective (internally-defined) criteria for making your choice (depends on motivational state and goals)

Question 66

risk

Answer 66

taking an action despite the outcome being uncertain
specific to value-based decision-making

Question 67

ambiguity

Answer 67

you have incomplete information, so you don’t know the specific consequences

Question 68

consequences of individual differences in risk-taking

Answer 68

high: addiction and impulsivity
low: stagnant living
most people are risk averse

Question 69

three risk profiles

Answer 69

risk averse: has a positive risk premium
risk neutral: has zero risk premium
risk seeking: has a negative risk premium

Question 70

risk premium

Answer 70

(expected gains of the risk option) - (expected gains of the certain option)

Question 71

what is irrational about risk?

Answer 71

risk preferences aren’t irrational (expected utility theory can account for these individual differences), but people are inconsistent in their preferences which is irrational (a bias)

Question 72

behavioural economics

Answer 72

because of the discrepancy between how people should act (classical economic theories) and the irrational decisions we make - looks at how people do act

Question 73

the framing effect

Answer 73

inconsistent risk preference when risks are framed in terms of gains or losses
risk averse when options framed as gains (safety option)
risk seeking when options are framed as losses (tolerate uncertainty)

Question 74

prospect theory

Answer 74

contrary to expected utility theory, stems from loss aversion
shape of the utility function (how we process losses and gains)
shape of the probability weighting function (unlikely vs. likely events, how we understand probabilities and risk)

Question 75

utility

Answer 75

subjective value assigned to an object (context-dependent) - assigned as a function of current state (reference point), not an absolute value - deviations from the reference point determine risk preferences

Question 76

utility function

Answer 76

describes how people map money to satisfaction - steeper for losses than gains (dissatisfaction is greater when you lose $1 than earned $1)
an extra dollar doesn’t cause the same amount of satisfaction based on the reference point (reference is $0, extra $1 causes a lot vs. reference is $1M, extra $1 doesn’t matter)

Question 77

probability weighting function

Answer 77

we overestimate the likelihood of extreme events (dying in a car crash) and underestimate the frequency of likely events (dying of cancer)

Question 78

Fourfold Pattern

Answer 78

depicts risk preferences based on probability weighting and utility functions
high probability gain + framed in terms of losses = risk seeking
low probability + framed in terms of losses = risk averse
high probability + framed in terms of gains = risk averse
low probability + framed in terms of gains = risk seeking

Question 79

neuroimaging evidence for framing effects

Answer 79

Ps made choice between options framed in terms of gains and losses (risky outcome and safe option)
activity in the frontal cortex when you don’t fall into the framing trap vs. activity in the amygdala when you do - emotional response may underlie framing effects

Question 80

prediction error

Answer 80

difference between what you predicted would happen and what actually happened
can be positive (unexpected good outcome) or negative (unexpected bad outcome) and they drive reinforcement learning

Question 81

link between prediction errors and decision-making

Answer 81

unexpected outcomes (in sports or weather - win/loss, sun/clouds) changed affect accordingly - and mood predicted risky decision-making in gambling (happy = more likely to gamble)

Question 82

which of the following about prospect theory is false?
(a) It tells us how people do act instead of how they should act
(b) the asymmetry of the utility function is made to account for the framing effect
(c) people tend to overestimate the probability of rare events and underestimate the probability of common events
(d) utility is an immutable property and is reference-independent

Answer 82

D - utility is context-dependent and subject to anchoring and adjustment heuristics (reference point)

Question 83

loss aversion in neuroscience

Answer 83

people with bilateral amygdala lesions were tested on a gambling task which people usually don’t take (equal risk of losing a small amount or winning a large amount) because of loss aversion - they took the gamble
amygdala may mediate loss aversion (removing a fear of poor outcomes)

Question 84

Someone goes to a park every day and sees dogs wearing top hats. They conclude that all dogs that visit this park wear top hats. This is an example of - reasoning because you are reasoning - information
(a) inductive; toward
(b) inductive; from
(c) deductive; toward
(d) deductive; from

Answer 84

B - working from observations to generalize

Question 85

types of syllogisms

Answer 85

All statements: “All A are B”
Negative statements: “No A is B” = “no B is A”
Some statements: “Some A are B” (at least one, possibly all)

Question 86

which types of syllogisms are difficult to reason with

Answer 86

Negative statements: mental model theory (difficult to imagine the absence of something)
Some statements: they can represent many structures

Question 87

omission bias + trolley problem

Answer 87

withholding is not as bad as doing (inaction is less bad than action because inaction is more difficult to classify) - even if the outcome is the same
example of difficulty reasoning with negative information
people have difficulty choosing the “action” option in the trolley problem - but people with frontal lobe damage have no trouble with it

Question 88

The atmosphere effect occurs when people -
(a) determine what conclusions follow from certain statements
(b) visualize sentences and mentally explore them
(c) rate a conclusion as true when there is similar phrasing in the premises and conclusion

Answer 88

C is correct
A = deductive reasoning
B = mental model theory

Question 89

Wason task

Answer 89

people asked to test a conditional statement by determining which cards to flip over
they tend not to go with the falsification principle (look for falsifying information) but with the confirmation bias

Question 90

familiarity effects on Wason task

Answer 90

Wason task with real-world situations = people are better at choosing the right cards

Question 91

Heuristics are to biases as - are to - ?
(a) mental shortcuts; rules
(b) mental shortcuts; outcomes
(c) outcomes; mental shortcuts
(d) specification; generalization

Answer 91

B

Question 92

Ellen is afraid sharks but not of drowning. Her perceived risk of sharks will be - prevalence rates and her perceived risk of drowning will be - prevalence rates.
(a) lower than; higher than
(b) higher than; lower than
(c) the same as; the same as
(d) the same as; lower than

Answer 92

B - higher media coverage of shark attacks than drownings and affect heuristic

Question 93

effect of the availability heuristic on our perception of our challenges

Answer 93

we think we’ve had it harder than others because we can remember the challenges we’ve had to overcome but not others’ = stronger availability

Question 94

gambler’s fallacy

Answer 94

false belief that a predicted outcome of an independent event depends on past outcomes (assuming sequential events are linked when they aren’t)
people keep investing after losses on the stock market
belief in a “winning streak”
loan officers and U.S. judges more likely to deny applications after granting the previous one, and vice versa

Question 95

how does the availability heuristic bias our judgments?
(a) makes judgments more accurate when information is available
(b) we confuse the frequency of what we can remember with actual occurrences
(c) facilitates ambiguous decisions
(d) we always recall things more easily when they occur frequently

Answer 95

B

Question 96

post-mortem vs. pre-mortem

Answer 96

post: learning from failures
pre: anticipate and prevent mistakes by putting a plan in place