Decision Making Flashcards
Ventromedial prefrontal cortex
The portion of the cortex in the front center of the brain that has a role in achieving the motivational balance and social sensitivity that is key to making successful judgments. Plays a part in personality.
Bayes’s theorem
A theorem that prescribes how to combine the prior probability of a hypothesis with the conditional probability of the evidence, given the hypothesis, to assess the posterior probability of the hypothesis, given the evidence.
Prior probability
Is the probability that a hypothesis is true before any consideration of the evidence. (The less likely the hypothesis was before the evidence, the less likely it should be after the evidence.)
Conditional probability
Is the probability that a particular type of evidence is true if a particular hypothesis is true.
Posterior probability
Is the probability that a hypothesis is true after consideration of the evidence.
Prescriptive model
A model used to evaluate the probability of a hypothesis. Used to set a rational norm for decisions (how decisions ought to be made).
Descriptive model
A model that describes how people actually behave.
Base-rate neglect
A failure to take into account prior probabilities (base rates) when making decisions.
Gambler’s fallacy
The belief that the likelihood of an event increases with the amount of time since the event last occured, by the “law of averages”.
Probability matching
Choosing between alternatives in proportion to the success of previous choices. Intuitive use of Bayes’ theorem
Recognition heuristic
Applies in cases where people recognize one item, but not the other one. This heuristic leads people to believe that the item they recognized has a higher value than the unrecognized one with respect to a specified criterion.
Subjective utility
The value that people place on things based on their own reasonings.
Subjective probability
The probability that people associate with an event, which doesn’t need to be identical to the event’s objective probability.
Framing effects
When people make different choices among equivalent alternatives depending on how the alternatives are framed (ie. what is used as a reference point).
Reinforcement learning
Mechanism for learning through experiencce what actions to take in a novel environment.
