Decision Making and Judgement Bias

Question 1

What is the SEU theory?

Answer 1

Also known as the utility theory.
A normative (rational/logical), mathematically-orientated theory of decision making.
Involves weighing up attributes and trade offs.

Question 2

What is utility?

Answer 2

the outcome that ‘ticks enough boxes’

Question 3

What is SEU?

Answer 3

the goodness of decision outcome.
e.g. how good a person feels from it

Question 4

What is descriptive invariance?

Answer 4

A key principle of rational decision making - the description of a task shouldn’t influence the option chosen.

Question 5

What is the framing effect?

Answer 5

Options described in different ways:
- Negative (loss) frame and risk seeking
- Positive (gain) frame and risk aversion.

Question 6

What is Prospect theory (Kahneman & Tversky, 1979)

Answer 6

Explains how decisions made and how decisions deviate from normative standards. It combines probability and utility.

Question 7

What are cognitive heuristics?

Answer 7

Reflexive mental shortcuts used to:
- Simplify complex cognition
- Increase speed and efficiency of thinking
- Lighten the cognitive load

Question 8

What are availability heuristics?

Answer 8

Memory retrieval or mental stimulation of event-consistent information leading to bias.

Question 9

Representativeness heuristics…

Answer 9

Violate normative principles when reasoning probabilistically.

Question 10

Anchoring and adjustment heuristic…

Answer 10

• Judgements based on numerical information.