Decision making: choices and chances

Question 1

What is decision making?

Answer 1

Decision making involves evaluating alternatives and making choices among
them.

Question 2

What is Simon’s theory of bounded rationality

Answer 2

Simon’s theory of bounded rationality
asserts that people tend to use simple strategies in decision making that focus on only a few facets of available options and often result in “irrational” decisions that are less than optimal.

Question 3

What is risky decision making?

Answer 3

risky decision making, which involves making choices under conditions of uncertainty.

Question 4

What is the availability heuristic?

Answer 4

The availability heuristic involves basing the
estimated probability of an event on the ease with which relevant instances come
to mind.

Question 5

What is the representativeness heuristic?

Answer 5

The representativeness heuristic involves basing the
estimated probability of an event on how similar it is to the typical prototype of that
event

Question 6

What is the conjunction fallacy?

Answer 6

The conjunction fallacy occurs when people estimate that
the odds of two uncertain events happening together are greater
than the odds of either event happening alone