Decision making Flashcards
What is the definition of judgement
initial part of the decision making process, probability of something happening with incomplete info, judgements are evaluated in terms of there accuracy
Describe the base-rate fallacy using the taxi-cab problem (Kahneman & Tversky, 1972). How is the correct answer computed according to Bayes’ theorem
Base rate fallacy is ignoring the frequency of an event within a given population
In the taxi cab problem, a cab was in an accident, 85% of cabs belonged to green company 15% to the blue company, eyewitness thinks it was blue, she was 20% in a test of similarity, people would typically say the probability the cab was blue is 80% but thats wrong.
Bayes theorem says u multiply base rates with new info
What are heuristics
rules of thumb that ignore part of the information, reduce cognitive efforts, enable faster and more accurate decisions
Describe the lawyer-engineer and bank-teller problems and how they demonstrate the representativeness heuristic. How about the conjunction fallacy?
- ppts say 90% that he is an engineer so base rates are ignored
- REPRESENTITIVNESS HEURISTIC = judging the likleyhood of an event based on how well it fits a stereotype.
- CONJUNCTION FALLACY = both A and B judged as more likely A or B on its own
What is the availability heuristic and affect heuristic? How are these studied? According to results by Pachur et al. (2012), are they helpful for making judgements about risk?
AVAILABILITY HEURISTIC = estimating the probability of an event happening based on the subjective ease of retreiving it
AFFECT HEURISTIC = use our emotions to influence our judgement.
PACHUR ET AL - ppts had to decide which of two causes of death have higher mortality rate in switzerland.
results show that decision making was mainly impacted by availability by direct experience (knowing someone who died in that way)
Do humans work beter with probabilities or natural frequencies
natural frequencies
What are the two different theories of judgement
- FAST AND FRUGAL HEURISTICS
- DUAL PROCESS THEORY
What does prospect theory say about decision making
loss aversion - we are more sensitive to things we loose so we take that into consideration when decision making. SUNK COST EFFECT
risk aversion - we prefer a sure gain rather then a risky gain
What are the individual differences in decision making
satisficers - content with making reasonably good decisions
maximisers - perfectionists
