Exam 3 (Reasoning and Decision-Making) Flashcards

1
Q

Normative

A

how people ought to reason; logical

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2
Q

Descriptive

A

how people actually reason

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3
Q

What are 2 examples of the flaws of descriptive reasoning?

A
  1. endowment effect

2. conjunction fallacy

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4
Q

Endowment effect

A

people tend to inflate the value of items they already own

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5
Q

Conjunction fallacy

A

concluding the probability of 2 things is higher than just 1 of those same things

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6
Q

What are the two types of logical reasoning?

A

deductive & inductive

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7
Q

Inductive reasoning

A

probabilistic inference

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8
Q

Deductive reasoning

A

drawing certain conclusions

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9
Q

Validity

A

conclusion follows from premise (form)

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10
Q

Truth

A

conclusion is true (content)

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11
Q

soundness

A

valid + true

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12
Q

Belief-bias effect

A

ex. dogs vs sharks having fur in syllogism

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13
Q

Inherent limitation (of logic)

A

only concerned with validity (not truth)

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14
Q

confirmation bias

A

when gathering possible solutions, we often seek positive answers
e.g. watson selection task - flip card

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15
Q

Logical fallacies

A

failures to follow rules of logic by drawing conclusions that are invalid

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16
Q

What have we found to happen when we make decisions in uncertain conditions? (3)

A
  1. irrational or inconsistent thinking
  2. we use judgment heuristics
  3. bounded rationality - this type of thinking may reflect adaptive limitations
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17
Q

What are the 3 theories of decision making?

A
  1. expected value
  2. expected utility theory
  3. prospect theory
18
Q

Expected value

A

objective usefulness or value will determine decision

  • $10 gamble 10% chance of $100 and 90% chance of $0
  • frequently violated
19
Q

Expected utility theory

A

subjective usefulness or personal value, not objective value
33% chance of 15 extra points, 44% chance of 5 extra
- can produce preference reversal

20
Q

Prospect theory

A
  • consequences are viewed in terms of change from a reference level ($1 vs $11, $1000 vs $1011)
  • decision weights
  • value function steeper for losses than gains
  • loss aversion
21
Q

Prospect theory proposes that decision weights tend to ____ small probabilities and ____ high probabilities.

A

Overweight, underweight

22
Q

Losses are __x more painful as gains are pleasurable

23
Q

What theory correctly predicts: most people picking option 1 & B, selling good investments too soon and losers too late, and why people are willing to pay high premiums for insurance?

A

Prospect theory

24
Q

What are heuristics and weaknesses in judgment and decision-making?

A
  • framing effects
  • subjective probability
  • availability heuristic
25
Framing effect
decisions influenced by how problems are framed (gains vs losses) - for gains we take the sure thing - for losses we take the risk
26
Framing ignores ___ theories but follows ____ theory
Utility, prospect
27
Subjective probability and 3 types
belief that usual odds don't hold - superstition 1. Gamblers fallacy 2. probability matching 3. representativeness heuristic
28
Gambler's Fallacy
thinking that a departure from what occurs on average or in the long term will be corrected in the short term - "due for a win"
29
Probability matching
tend to select based on relative frequency of events rather than to maximize success - 80 red, 20 blue balls
30
Representativeness heuristic
tend to see more representative outcomes as more likely | - ex. flipping a penny and thinking one order will be statistically different
31
Availability heuristic
rely on what is readily brought to mind to make judgments | - words of 4 or more letters, are there more than begin with R or that have R in the 3rd position?
32
What are problems with heuristics? (6)
1. unrepresentative exposure 2. analogy 3. simulation heuristic 4. anchoring and adjustment 5. sub-optimal choice heuristics 6. sunk costs
33
Unrepresentative exposure
Accessibility | E.g. media coverage
34
Analogy
use solution to another 'similar problem' | e.g. do they grow much corn in OH?
35
Simulation heuristic
judge situations on ease with which you imagine alternatives | - e.g. unskilled teenage driver
36
Anchoring and adjusment
strategy of starting from an initial estimate or anchor, then adjusting it ex. first impression ex. Ghandi's age
37
Sunk costs
~unrecoverable resources already invested affect future decisions
38
What is EMT (Error Management Theory)
biased reasoning strategies can be adaptive - humans have evolved towards making the least costly error
39
Smoke detector principle
better to have one kind of error than another
40
What supports EMT?
- women underestimate men's commitment, men overestimate | - positive bias about ourselves - we are willing to take chances