Decision making

Question 1

Definition

Answer 1

process of picking mong a set of alternatives. broad range from unicellular organisms to complex political behaviours

Question 2

Value based decisions

Answer 2

based on subjective preferences

Question 3

Risky choice paradigm

Answer 3

used to study risk and uncertainty
give ppts an choice with one having a probability of working out for them
people tend to go for safe option

Question 4

Expected value

Answer 4

value of option based off the probabilities of getting it

Question 5

Risk

Answer 5

known probabilities

Question 6

Uncertainty

Answer 6

unknown probabilities so estimate

Question 7

Risk averse

Answer 7

don’t align with expected value

Question 8

Monetary value

Answer 8

Bernoulli - change to subjective value (utility)

Question 9

Utility curve

Answer 9

Not linear function of value - additional amounts of money worth less the richer you are
(concave function of value)

Question 10

Psychoeconomic function

Answer 10

translates objective value to subjective values in your head

Question 11

Expected utility theory

Answer 11

calculate expected utility based on value on the curve (utility x probability) applied to economic theory

Question 12

utility curve varies due to

Answer 12

individuals, contexts, goods, culture

Question 13

EU theory violated by

Answer 13

actual choice behvaiour