Decision Making Flashcards

1
Q

What is the economic utility theory?

A

It states that people are basically rational. If people have all the relvant information, they will make a decision that results in the maximum utility.

Expected utility=odds of gain x value of gain

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2
Q

What is utility?

A

It is the outcomes that are desirable because they are in the person’s best interest

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3
Q

What are the advantages and disadvantages of the utility approach?

A

It provides specific procedures to lead to the best choice, but people can find value in different things, and many decisions involve payoffs that can’t be calculated.

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4
Q

What is prospect theory?

A

Utility depends on subjective gains and losses. Gains and losses are not symmetrical.

Value of prospect=decision weight of probability x subjective utility of value

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5
Q

Explain decision weights for prospect theory

A

decision weights are lower than the corresponding probabilities except in the range of low probabilities

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6
Q

What is the focusing illusion?

A

A focus on one aspect of a situation and ignoring other aspects that may be important.

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7
Q

What does justification have to do with decision making?

A

People who were given a reason to justify were able to make a decision over people who were not able to make a decision. EX: pass, fail, or didn’t know yet

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8
Q

Explain the omission bias

A

It is a tendency to do nothing to avoid making a decision that could be interpreted as causing harm

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9
Q

Explain neuroeconomics and how it approaches decision making

A

Approaches the study of decision making that combines psychology, neuroscience, and economics. Determines that decision are influenced by emotions and these emtions are associated with activity in different brain areas.

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10
Q

What is the difference between integral and incidental emotions?

A

integral emotions relate to the actual act of making a decision whereas incidental emotions are unrealted to the decision

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11
Q

What are the two somatic markers that bias decision making?

A

body loop-changes in body that are projected to the brain and evoke emotion

as-if body loop-cognitive representations of emotions can be activated in the brain without being directly elicited by physiological response.

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12
Q

What are some heuristic seach strategies to problem solving?

A

working backward

means-ends analysis

by analogy

by intuition

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13
Q

What are illusory correlations

A

correlations that appear to exist, but do not exist or are much weaker than assumed. EX: stereotypes

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14
Q

What is the representativeness heuristic?

A

the probability that A comes from B can be determined by how well A resembles properites of B

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15
Q

What is the conjunction rule?

A

Probability of two events cannot be higher than the probability of the single constituents

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16
Q

What is the law of large numbers?

A

The larger the number of individuals randomly drawn from a population, the more representative the resulting group will be of the entire population

17
Q

Define reasoning

A

cognitive processes by which people start with information and come to conclusions that go beyond that information

18
Q

Define deductive reasoning

A

the particular is inferred from the general. one in which the conclusion follows from the premises with logical necessity.

EX: all men are mortal. Socrates is a man. Therefore, Socrates is mortal

19
Q

Define inductive reasoning

A

the general is inferred from the particular. One in which the conclusion follows with some degree of probability. Conclusions are suggested

20
Q

What is a syllogism?

A

Contains two premises and a conclusion. It is valid if the conclusion follows logically

21
Q
A