Decision Making Flashcards
Need for cognitive closure
A desire to find a clear answer to any question and a clear judgement without any space for ambiguity. Individuals with a high need for cognitive closure tend to display polarized thinking and judging
Expectancy-Value-Theories
Poeple strive for goals that appear most valable or desirable, while taking into account how likely it is to attain these goals.
Affect-Infusion-Model
Affect infusion is the process whereby affectively loaided information exerts an influence on and becomes incorporated into the judgemental process (our affect can influence our decisions)
Happens when judgements require constructive processing which leads to a heuristic, simplified or a substantive, generative processing strategy.
Drive Reduction Theory
Proposed the assumption that individuals strive to maintain homeostasis and that behaviour is reinforced by terminating a negative experience (tension)
Cognitive Dissonance Theory
Cogntive dissonance is an unpleasant state of arousal that stems from differences between our attitudes and our behaviour.
- When our behaviour is in conflict with our beliefs, we tend to justify this disparity to reduce cognitive dissonance
Subjective expected utility theory
May be applied to decision situations where no objective
mathematical probabilities are available, and judgments are
no more than expressed beliefs about likelihoods
(Comparability, transitivity, dominance, independence, invariance)
Attribution error
A cognitive bias where people tend to give too much importance to a person’s character or personality trait when explaining their behaviour, while not considering the influence of the situation or environment
Heuristic and Bias
Heuristic: rule of thumb, simplification of judgement processes, quick and dirty
Bias: inclination or prejudice, tendency
Prospect theory
- a descriptive model for decision-making under risk
- because it is not a normative theory, it does not define ideal choices
- an adapted version of SEU, which accounts for several of the described discrepancies
Two phases to the choice process:
Editing phase: ‘negligible’ components of the decision problem might be discarded, and a reference point is created, allowing to perceive outcomes as gains or losses
Evaluation phase: attitudes towards risks, which involve both gains and losses are utilized to evaluate the potential outcomes.
→ People evaluate decision outcomes in terms of gains or losses from a neutral reference point.
ONTHOUDEN:
▪ Risky choice framed in terms of gains: individuals are risk-averse, preferring
solutions that lead to a lower expected utility but with a higher certainty
▪ Risky choice framed in terms of losses: individuals are risk-seeking, preferring solutions that lead to a lower expected utility if it has the potential to avoid losses
Loss aversion
- The value function is steeper for losses than it is for gains.
- People have stronger feelings about losses than they do about gains of equivalent value
See mindmap for photo
Motivation vs Volition
Motivation focuses on decisions of which goals are attractive and feasible (goal-setting)
Volition involves the actions and thoughts directed towards achieving those goals (goal-striving). Enables us to overcome obstacles and act on our intentions, facilitates perseverance and long-term behavioural tendencies.
Rubicon model of action phases
A theoretical model that illustrates the distinction between motivation and volition. Highlights that motivation is always an interaction between a person and a situation, leading to the forming of intentions and making decisions.
Make relevant or easier to motivate people
Projection Bias
Tendency to project the past or present into the future.
Results in predictions that are too biased toward the present, impedes development of novel ideas as well as assessment of their likelihood of success
Egocentric empathy gap
Decision-makers consistently over-estimate the similarity between what they value and what others value
Hot/cold gap
The emotional state of a decision-maker at the time of the prediction influences their assessment of the potential value of an idea.
Enthusiasm over an idea can impede the accuracy of prediction of how other will react, under-or overevaluation of ideas
Focusing Illusion
Decision-makers tend to overestimate the effect of one factor at the expense of others.
Overreacting to specific stimuli, and ignoring others
Impact testing may result in a narrowed, and less attractive set of ideas
Say/Do Gap
Consumers are frequently unable to accurately describe their own current behaviour, much less make reliable predicitions about what they want
- A meta-analysis of over 100 studies concludes that consumers
are not reliable predictors of their own purchase behaviour
- even focus groups have a high error rate
The Planning Fallacy
People describe their pasts as consisting both positive and negative events, yet predict their futures as overwhelmingly positive
- Tendency to be optimistic about how well-received ideas will be
- Overconfidence has been found to extend to organizational planning processes
Confirmation bias
Decision-makers seek for information that supports their preferred alternative
- Search for facts, which allows them to build faith in favoured solutions
- Must be compelled by data to believe info which point to a less favoured idea
Endowment Effect
Decision-makers’ attachment to what they already have
- Loss aversin makes giving up on something more painful than the pleasure of innovation
- Hinders new and improved solutions
Availability Bias
- Decision-makers undervalue options that are harder for them to imagine
- Familiarity of an idea is likely to be inversely related to its novelty
Mitigating biases
- Projection, egocentric, empathy, focusing, hot/cold: deep data on concerns and perspectives, improve imagination, diverse teams
- Say/do gap: understand own needs, prototyping and observing
- Planning, confirmation, endowment effect, availability bias: perspective taking and ethnography, seeking disconfirming data, multiple options
Status Quo Bias
Tendency to prefer for things to remain the same.
- Current situation is baseline and changes are perceived as losses or gains
- Interacts with loss aversion: people are especially likely to remain in a less-than-ideal situation when making changes leads to losing something, even if overall, there will be more gains than losses
Representativeness Heuristic
Estimating the likelihood of something by comparing it to a prototype that already exists in our minds.
Individuals tend to ignore the base rate (how often something occurs) when presented with a description that seems typical of something (even if that something is very rare)
Conjunction Fallacy
Assuming that two events both being true at the same timeis more likely than each event alone
SImplified Design-Thinking Process
Data gathering about user needs -> Idea generation -> Testing
Tools: visualization, ethnograaphy, sense-making, assumption surfacing, prototyping, cocreation, field experiments
