Decision Making Flashcards
normative approaches
attempt to establish ideal ways of deciding that will give the best decision possible
Decision
the cognitive process of choosing between alternative possible actions
descriptive approaches
aim to describe how decisions are actually taken as against how they should be made
single attribute
decisions problems that involve alternatives that vary in only one dimension
multi attributional decision problem
a decision task in which the alternatives vary in many dimensions or aspects
expected value
the long-term average value of a repeated decision that is determined by the probability and size of the outcome.. a normative approach
Expected value theory by Atkinson
postulates that motivation for a given behaviour or action is determined by two factors:
1. expectancy: how probable it is that a wanted (instrumental) outcome is achieved through the behaviour or action
2. value: how much the individual values the desired outcome. Individual’s ability beliefs, expectancies for success and subjective task values are crucial in determining individual’s choices, effort, persistence, and performance
risk aversion
avoiding risky choices even when they have a higher expected value than riskless alternatives
risk seeking
a preference for risky choices even when riskless alternatives of higher value are available
utility
the subjective value of an option
subjective probability
how likely a person believes an outcome to be irrespective of the objective probability
Utility and Prospect Theory by Tversky & Kahneman
A decision theory stressing relative gains and losses. It describes how people evaluate their losses and acquire insight in an asymmetric fashion. Unlike the expected utility theory, which models the decision-making of perfectly rational agents, the prospect theory aims to describe the actual conduct of individuals.
loss aversion
a key idea of prospect theory that there is a greater dislike of losing utility than liking for gaining the same degree of utility.
e.g.: A gain of a sum of money has less positive impact than the loss of the same amount of money has negative impact
endowment effect
tendency to over value a possessed object and to require more money to sell it than to buy it in the first place
status quo bias
a tendency to prefer the current state of affairs
temporal discounting
the decline in subjective value of an outcome with a time delay to its being received
preference reversal
when an original preference switches
deliberation
a process by which decisions makers consider their options, representing the options and outcomes as well as evaluating them
involves: prospection, metacognition, sometimes opportunity costs
prospection
the capacity to represent the future
metacognition
awareness of one’s own thoughts and cognitive processes
opportunity costs
the loss of potential gains from one alternative when another alternative is chosen
framing
effects that arise when irrelevant features of a situation affect the decisions that are made
invariance
the principle that choices between alternatives should not be affected by how the options are described
heuristics
mental shortcuts that allow people to make fast decisions
two major heuristics
availability: people judge the likelihood of an event based on how easily examples come to mind
representativeness: people make decisions based on how closely something resembles a typical example or prototype.
conjunction fallacy
the mistaken belief that the conjunction of two events is more likely than either one of A or B
Base rates
(of an event) is the overall probability of the event in a population
multi-attribute utility theory by Neumann & Morgenstern
It’s a tool used to make decisions when faced with multiple alternatives and uncertain outcomes. It breaks down decisions into attributes, assigns weights to each attribute based on importance, evaluates alternatives on each attribute, combines scores, and selects the alternative with the highest overall utility score.
two system approaches to decision making
system 1: automatic, implicit, fast, effortless
system 2: abstract reasoning, hypothetical, unemotional, operates slowly
fast and frugal heuristics
A fast heuristic is easy to use and allows one to make judgments quickly. A frugal heuristic relies on a small fraction of the available evidence in making judgments.
consequentialism
the view that decisions between options are based on the expected results or consequences of selecting each option
utilitarianism
a theory of choice whereby choosers act so as to maximize their happiness or utility
deontological approach
the view that decisions affecting others (ethical decisions) should be based on principles irrespective of consequences
omission bias
the tendency to judge harms resulting from inactions (omissions) as less harmful or culpable than the same harms resulting from actions (commissions)
punishment
from consequentialism pov punishment of actions is only valuable if it has a deterrent effect and prevents undesired acts being repeated by the perpetrator
naturalistic decision making
an approach to understanding how people make decisions in real-world, complex, and dynamic situations. It originated from studies of expert decision makers, such as firefighters, pilots, and military commanders, who often face high-stakes situations with incomplete information and time pressure.
recognition primed decision making
a model where experts rely on pattern recognition and mental simulation to make quick decisions in complex situations, rather than systematically evaluating all options.
social judgement theory
suggests that an individual’s position on an issue depends on three factors: anchor, alternatives, and ego-involvement. This theory has a premise that there is a spectrum of whether one accepts or rejects a new piece of information.
Decision-making is affected by comparisons with others and the perceived range of acceptable options within a social context.
