Decision Making - Chapter 11 Content

Question 1

What are the 2 sources of decision-making difficulties?

Answer 1

Conflict: decision maker makes a trade-off across different dimensions (the price of a car vs. gas mileage)

Uncertainty: outcome of a decision often depends on uncertain variables or events (future demand for a product)

Question 2

What are the 5 heurisitics?

Answer 2

1. availability
2. representativeness
3. anchoring
4. illusory correlation
5. confirmation bais

Question 3

Explain what the availability heuristic is.

Answer 3

It is basically the sense that people will guess and think the right one is the answer that comes to mind easier.

An example is with thinking of as many words with n as the 2nd last and words ending in -ing. They are technically the same thing but people are gonna be able to come up with more -ing words because it’s more familiar to them and they tend to overgeneralize them.

Question 4

Explain the representativeness heuristic.

Answer 4

The people will go with an answer that looks more prototypical to them and they will deem this as more probable.

An example is that people guess which pattern is more likely for the order of children and gender given birth. People will go with the option that is more random even though the gender of a child is still a 50/50 chance and will always be even if you have 2 girls, there is no more of a chance you will have a son. (Error in judgement with the law of small numbers and gamblers fallacy)

Question 5

Explain the anchoring heuristic.

Answer 5

This is that people will base their final answer on the first one to anchor themselves and adjustment will go.

An example is either multiplying starting at 8 all the way to 1 or starting at 1 all the way to 8. People will already know that the question starting at 8 will be much larger even though they are all the same numbers, so they base their answer off of that assumption.

Question 6

Explain the illusory correlation.

Answer 6

This theory explains that you will judge the data and create relationships with such even when no such relationship exists. (ex. is saying more crimes happen during a full moon, and you only look at instances where there is true to solidify that your relationship is true)

Question 7

Describe the 2-4-6 experiment Watson did to explain confirmation bias.

Answer 7

1) people were told to generate other triplet combinations in order to figure out the rule with the original 2-4-6 set
2) they would create a triplet that would keep the rule consistent (to create confirmation bias), but they would never test against their hypothesis
3) There are triplets that would confirm the original rule and confirm their false, they need to disconfirm their hypothesis

Question 8

Define confirmation bias

Answer 8

Participants seem to be trying to confirm their rule is true, rather than trying to test their rule

Question 9

What were the other 2 experiments done to test the confirmation bias theory using cards?

Answer 9

1) With a rule in place and a created story, people had to figure out which cards they needed to flip. Since this was an abstract version of a sectional test, this was harder for people to understand.
2) they then created the same test but used meaningful content with legal drinking age and this was found to be much easier, and people only needed to check the cards that violated the rules.

Question 10

Define cheater detection.

Answer 10

There is a dedicated mechanism for detecting those who default on social contracts (taking benefits without paying any costs)

Question 11

Explain how split-brain patients differed in decision-making.

Answer 11

These patients both have callosotomy, meaning that their 23 hemispheres have no way of communicating with each other anymore. They found that left and right side would behave independently when given tasks such as drawing different shapes with each hand.

Question 12

What is the left side of your brain primarily responsible for when it comes to decision-making?

Answer 12

Frequency matched: matches the response to their guesses and created a reason for the relationship.

Question 13

What is the right side of your brain primarily responsible for when it comes to decision-making?

Answer 13

Maximized: always choose the option that has occurred the most frequently in the past, the most rational thing

Question 14

define cognitive overload

Answer 14

When the information available overwhelms the cognitive processing available

Question 15

What are the 5 categories of making decisions?

Answer 15

1. set or revise goals
2. make plans
3. gather information
4. structure the decision
5. make a final selection

Question 16

Define subject and objective probabilities.

Answer 16

Subjective is influenced by the characteristics of the probability estimator and objective are not.

Question 17

Define heuristic.

Answer 17

Mental short cute to help make judgements easier

Question 18

Explain the error in judgement with the gambler’s fallacy and the law of small numbers.

Answer 18

Gambler’s fallacy is the idea that things such as flipping a coin will always be 50/50, no matter what because the probability stays the same even if it feels like it doesn’t. The law of small numbers is the idea that people expect small samples to resemble in every respect the population from which they are drawn.

Gamblers can be thought of as an instance of belief in the law of small numbers

Question 19

Define framing effects.

Answer 19

This phenomenon explains that people evaluate outcomes as changes form a reference point, their current state. Depending on how their current state is described, they perceive certain outcomes as gains or losses.

Question 20

Define the suck cost effect.

Answer 20

The greater tendency to continue an endeavour once an investment in money, effort or time has already been made.

Question 21

Define hindsight bias.

Answer 21

This is a tendency to consistently exaggerate what could have been anticipated in foresight when looking back on an event. Once you know how a decision has turned out, you look back on events leading to your decision and they become more inevitable then they really were.

Question 22

What are the different models of decision-making?

Answer 22

Normative: ideal performance under ideal circumstances
Prescriptive: tell us how we ought to make a decision
Descriptive: simply detail what people actually do when they make decisions

Question 23

Define the expected utility theory.

Answer 23

It can be shown that if you always choose so as to maximize expected utility, then over a sufficiently large number of decisions your own satisfaction will be the highest.

Question 24

Define image theory.

Answer 24

The fundamental assumption of this theory is that in making real-life decisions, people rarely go through a formal structuring process in which they lay out all their options and criteria. It is more so done by a pre-choice screening of options.

Question 25

What game was used to help understand the brain mechanisms used for decision-making?

Answer 25

The ultimatum game! This is where people had the opportunity to split the money with someone, or if they rejected the offer, no one would get any money. This showed that when they were presented with a fair offer, they would always accept. But with an unfair offer, they will always reject it due to the emotional response to make the other person angry as you are not getting the fair amount, even when some money is better than no money.

They found that unfair offers showed activation in the dorsolateral prefrontal cortex (anything for effortful processes), and insula (interacting with more deliberate processing, and automatic emotions)

Question 26

What experiment was done to differentiate the causality in the split brain?

Answer 26

There were 2 tasks that were instructed for the participants to do and they were gonna show both causal perception and interference. They controlled this by getting the person to look at someone on their right and move their right hand, and that is all processed by the left hemisphere. The control group with an intact corpus callosum showed that there was no difference in R and L hemisphere activity for each of the tasks. But for the people with no corpus callosum, the causal perception was mainly the RH and causal interference was mainly the LH (a double displacement as there was a complete flip in data for the hemispheres)

Question 27

Define neuroeconmonics

Answer 27

The study of human behaviour in a competitive game environment