Decision Making

Question 1

What is perception?

Answer 1

Perception is a process by which individuals interpret and organise their sensory impressions to give meaning to their environment.

Question 2

Can we trust our perception? Give some evidence

Answer 2

Our perception selectively picks up informations (see gorilla experiment), so not fully - valuable but limited

Question 3

Describe bounded rationality theory

Answer 3

• Our cognitive capacity is limited and we make decisions with limited informations
• Alternatives generated from experience rather than analysis
• Seeks solutions that are satisfactory and sufficient

Question 4

Name some biases

Answer 4

• Anchoring bias (focus on initial info)
• Status-quo bias (keep as they are)
• Sunk-cost bias
• Confirmation bias
• Overconfidence bias
• Availability bias (use your info)
• Hindsight bias (thinking you would have known)