Decision making and reasoning Flashcards
Erroneous reasoning - in judgement and reasoning:
fallacy
The goal of human action is to seek pleasure and avoid pain:
subjective expected utility theory
According to subjective expected utility theory, the goal of human action is to?
Seek to maximise pleasure (positive utility) and minimise pain (negative utility)
A calculation based on the individual’s judged weightings of utility (value), rather than on objective criteria:
subjective utility
A calculation based on the individual’s estimates of likelihood, rather than on objective statistical computations:
subjective probability
Mental shortcuts that lighten the cognitive load of making decisions:
heuristics
Rational, but within limits:
bounded rationality
Consider options one by one, and then select an option as soon as one that is satisfactory or just good enough to meet our minimum level of acceptability:
satisficing
We eliminate alternatives by focusing on aspects of each alternative, one at a time:
elimination by aspect
the prevalence of an event or characteristic within its population of events or characteristics:
base rate
Make judgements on the basis of how easily we can call to mind what we perceive as relevant instances of a phenomenon:
availability heuristic
People adjust their evaluations of things by means of certain reference points called end-anchors:
anchoring
A heuristic related to availability:
anchoring-and-adjustment heuristic
the way that the options are presented influences the selection of an option:
framing
Used to select from among choices or to evaluate opportunities:
judgement and decision making
What are the three assumed things in the classical decision theory?
- fully informed 2. infinitely sensitive to variation 3. fully rational in regard to options.
What are the three biases that frequently occur when people make decisions?
illusory correlation, overconfidence, and hindsight bias
Judge the probability of an uncertain event according to how obviously it is similar to or representative of the population of which it is derived and to the degree it reflects the salient features by the process of which it is generated:
representativeness heuristic
We are predisposed to see particular events or attributes and categories as going together, even when they do not:
illusory correlation
An individual’s overvaluation of her or his own skills, knowledge or judgement:
overconfidence
When we look at a situation retrospectively, we believe we easily can see all the signs and events leading up to a particular outcome:
hindsight bias
a mistaken belief that the probability of a given random event such as winning or losing at a game of chance, is influenced by previous random events:
Gambler’s fallacy
an individual gives a higher estimate for a subset of events than for the lager set of events containing the given subset:
conjunction fallacy
The fallacy represents the decision to continue to invest in something simply because one has invested in it before and one hopes to recover one’s investment:
sunk-cost fallacy
