decision making

Question 1

Simple decisions

Answer 1

Little risk
No difference in benefit

Question 2

Complex decisions

Answer 2

Harder to weigh up
More uncertainty
Little information to help guide you

Question 3

Reducing uncertainty

Answer 3

Minimise risk
Maximise benefit

Question 4

Identification stage

Answer 4

Identify the need for a decision to be made
Innate process
The decision will be framed in regards to the costs and benefits in this stage
The way the decision is framed can change the outcome of the decision

Question 5

Generation stage

Answer 5

We look at all the different alternative choices we have and identify them
We may not have energy to choose between the alternate choices

Question 6

Judgement stage

Answer 6

Look at all the choices, costs, losses, benefits
See if the comparisons are straightforward and what strategies we should employ

Question 7

Summary of decision making procedure steps

Answer 7

Need for decision is realised
Alternatives identified
Evaluated and come up with final decision

Question 8

How to calculate probability

Answer 8

Probability of an impossible event is 0
Probability of a sure event is 1
All probability ranges between 0 and 1

Question 9

Overestimating probability

Answer 9

If prior experience is inaccurate then we could overestimate what a real probability of an event happening is

Question 10

Dependent events

Answer 10

Probability of this event depends on the first event
“Draw a card from a deck, do not replace it”

Question 11

Independent events

Answer 11

Probability of this event doesn’t depend on the first event
“Draw one card from this deck, and another card from another deck”

Question 12

Conjunctive events

Answer 12

Known as the AND rule
Probability will decrease

Question 13

Cumulative events

Answer 13

Known as the OR rule
Probability will increase

Question 14

Heuristics

Answer 14

Mental shortcuts that can facilitate problem solving and judgements
Used when little information is available

Question 15

Benefits to heuristics

Answer 15

Can reduce cognitive load
Look at a small amount of options quickly in a small amount of time

Question 16

Drawbacks to heuristics

Answer 16

May result in irrational or inaccurate judgements
Accuracy depends on the environment

Question 17

Availability heuristic

Answer 17

Make judgement based on how easy it is to bring an instance or occurrence to mind
Can lead to biases as making decisions based on information at hand, not necessarily the facts

Question 18

K Study - Availability Heuristic

Tversky and Kahneman

Answer 18

Asked participants if more words begin with K or if more words have K as their third letter
Participants got it wrong as it is harder to think of words with K as the third letter
Shows that availability can lead us to make irrational and incorrect decisions

Question 19

Representativeness Heuristic

Answer 19

Make probability judgements about the likelihood that an event arises from a category based on the extent to which the event is similar to the prototypical example of that category

Question 20

Linda Problem - Representativeness Heuristic

Tversky and Kahneman

Answer 20

Gave participants a list of statements about Linda
Participants expected Linda to be a teller and a feminist more than being just a teller
Tversky and Kahneman put forward the representativeness heuristic as the information given makes people want to create links to make info coherent, even if it is against probability

Question 21

Cumulative risks

Answer 21

Measure of the total risk that a certain event will happen during a given period of time
Probability of risks get added up overtime in situations and can have serious effects

Question 22

Anchoring and adjustment heuristics

Answer 22

When estimating a certain value we tend to give an initial value then adjust it by increasing or decreasing our estimation
We often get stuck on that initial value (anchoring) which results in us making insufficient judgements

Question 23

Portion size example - anchoring and adjustment heuristic

Answer 23

Easy to end up overeating when we are served a large portion when compared to a small one
All participants asked to guess how much food they could eat when primed with either a high, low or no portion anchor
When primed with a high anchor, people think they can eat more