Hard cards

Question 1

What is multiplication

Answer 1

A and B not mutually exclusive P(A&B) <>0

P(A and B both true): P(A&B) = P(A|B)*P(B)

Outcomes are independent if knowing one does not tell you anything about the other.

Question 2

What are humans well prepared for?

Answer 2

Humans are well prepared to make fast and simple decisions in a stable, predictable environment with relatively few homogeneous actors and to spend more energy than strictly necessary.

Question 3

What are judgments?

Answer 3

(the process of) Attaching a qualitative/quantitative value to something

Could be estimates, evaluations, opinions, etc.

Question 4

What is the central notion of dual process theory?

Answer 4

Accessibility
Things that come to mind easier are judged to be more likely, frequent, probable, etc.

Question 5

What describes system 2?

Answer 5

Slow, effortful, conscious and explicit.

You are aware of your own thinking, you are deliberately making a judgment or decision.

Question 6

What describes system 1?

Answer 6

Intuitive, fast, automatic, emotional, effortless, system of decision making.

Question 7

What is additivity?

Answer 7

2 outcomes of event, both mutually exclusive.
2 outcomes of event, both mutually exclusive.

Question 8

What is representativeness (heuristic)?

Answer 8

Things that are typical for their category are judged to be more likely, frequent, probable etc.

You compare situations to mental prototypes/stereotypes instead of statistical reasoning.

Question 9

What is prospect theory (Kahneman & Tversky 1979)

Answer 9

We hate risk, unless it enables us to see a path out of a bad situation.

Question 10

What effectively happens with framing in our minds?

Answer 10

System 1 kicks in, causing us to become risk averse with gains and risk-seeking with losses. System 1 causes us to make a wrong choice.

Question 11

What are two special cases in prospect theory?

Answer 11

Certainty effect and possibility effect.

Question 12

What are the two main elements in prospect theory?

Answer 12

S-shape and framing

Question 13

What is the ellsberg paradox?

Answer 13

Ambiguity aversion: we are willing to pay less for a vague choice than for a clear choice

Question 14

What has a disproportionate weight in system 1 versus system 2?

Answer 14

Easily accessible perceptions, impressions, intuitions, etc. from system 1 have a disproportionate weight on our judgments and choices.

Question 15

What is anchoring?

Answer 15

When estimating numbers, we start out from something that we know (anchor) and adjust upward or downward. The anchor can be completely arbitrary.

Question 16

What is the primacy effect?

Answer 16

First item weight heavier, and acts like an anchor.

Question 17

What is inattentional blindness?

Answer 17

When we focus on one thing, we fail to notice other things (gorilla).

Question 18

What is overestimation?

Answer 18

We think we are better, smarter, faster, more capable etc. than we actually are.

Question 19

What is overplacement?

Answer 19

We tend to falsely think we are better than others on certain dimensions.

Question 20

What is overprecision?

Answer 20

We feel to certain about the accuracy of our judgments and decisions.

Question 21

What is escalation of commitment?

Answer 21

A pattern of behavior in which an individual or group will continue to rationalize their decisions, actions and investments when faced with increasingly negative outcomes rather than alter their course.

many things come together here: sunk cost fallacy, status quo bias, omission bias, confirmation bias, etc.

Question 22

What is the conjunction fallacy?

Answer 22

Our estimation of probabilities is influenced by how specific an outcome is, we judge more specific outcomes more likely than general ones.

More specific but very typical outcomes are judged more likely than general outcomes that include the specific one.

Question 23

What are two primary reasons for representativeness?

Answer 23

Insensitivity to base rates
Insensitivity to sample sizes.

Question 24

What is pattern recognition?

Answer 24

Our brains see patterns everywhere, which we tend to judge as more likely incorrectly. We focus on developing cause-effect stories, but many things are due to chance and randomness which we overlook.

Question 25

What is reciprocity?

Answer 25

We act as bookkeepers in interactions with others, we have debit and credit balances. We tend to be nice to people who are nice to use, and vice versa.

Question 26

What are social norms?

Answer 26

Rules and standards that are understood by members of a group, and that guide or constrain social behaviors without the force of law.

Question 27

What happens with system 1 and system 2 with ethicality?

Answer 27

System 1 often favors a self-serving action, and recognizing the moral consequences of our behavior requires careful, deliberate consideration of a decision.

Question 28

What is the empirical evidence regarding Rest’s model?

Answer 28

The 3 assumptions are often violated, our behavior often does not come from an intention to handle a certain way.

Question 29

Where does unethical behavior not come from?

Answer 29

Unethical behavior does not follow from a deliberate and careful decision in which we tradeoff the (moral) costs and benefits of actions.

Question 30

What is motivated blindness?

Answer 30

Deliberately look the other way when another person takes immoral or painful actions that benefit you.

Question 31

What is the attribution bias?

Answer 31

My success is due to hard work and excellent skills, my failures are due to bad luck. Others’ successes are due to good luck, others’ failures are due to a lack of effort ar ability.

Question 32

What are descriptive models of ethics split by?

Answer 32

Classic and contemporary approaches.

Question 33

What is bounded ethicality?

Answer 33

The systematic and predictable psychological processes that lead people to engage in self-serving but unethically questionable behaviors.

Question 34

What is moral wiggle room?

Answer 34

Deliberately ignore information to avoid feeling bad about our own actions. When there is some uncertainty about the consequences, it’s easier to ignore our actions.

Question 35

What are implicit attitudes?

Answer 35

Evaluations that occur without conscious awareness towards something.

Question 36

What is the effect on managers with shared slack?

Paper Church et al. 2012 (WK6)
Shared interest and honesty in budget reporting

Answer 36

Shared benefits make slack more self-justifiable to the manager.

Question 37

What is the implication for organizations?

Paper Church et al. 2012 (WK6)
Shared interest and honesty in budget reporting

Answer 37

If organizations can build an ethical organization environment in which most employees live up to prosocial moral principles, it would be difficult for managers to justify potential opportunistic behavior.

Question 38

What are social preferences?

Answer 38

People tend to care about what happens to others.

Question 39

What are two important social preferences?

Answer 39

Fairness and reciprocity.

Question 40

In which 5 ways are our decisions affected by the presence of other humans?

Answer 40

• Social norms
• Social preferences
• Trust and cooperation
• Social comparison and competition
• In-group favoritism

Question 41

Of what items does bounded ethicality consist?

Answer 41

• Overclaiming credit (overconfidence, attribution bias)
• In-group favoritism
• Implicit attitudes
• Indirect unethical behavior
• Sacred values
• Motivated blindness

Question 42

What is the effect of ambiguity on subjective probabilities?

Answer 42

Ambiguity about probabilities makes subjective probabilities more moderate.