HEURISTICS & BIAS

Question 1

Heuristics

Answer 1

Mental shortcuts used for quick decision-making. Common heuristics include representativeness, availability, and anchoring.

Question 2

Representativeness Heuristic

Answer 2

Assessing the likelihood of an event by comparing it to a prototype, often neglecting base rate information.

Question 3

Anchoring Effect

Answer 3

The tendency to rely too heavily on the first piece of information encountered (the anchor) when making decisions, adjusting insufficiently away from it.

Question 3

Availability Heuristic

Answer 3

People judge the probability of an event based on how easily examples come to mind, often overestimating rare events after media attention.

Question 4

Optimism Bias

Answer 4

The tendency to overestimate positive outcomes and underestimate negative ones, leading to planning fallacy.

Question 5

Confirmation Bias

Answer 5

Searching for, interpreting, and recalling information in a way that confirms one’s preconceptions while ignoring contrary evidence.

Question 6

Prospect Theory

Answer 6

People are risk-averse when it comes to gains and risk-seeking when facing losses, with loss aversion meaning losses are felt more strongly than equivalent gains.

Question 6

Decoy Effect

Answer 6

Introducing a third, less attractive option influences people’s choices by making one of the original two options appear more desirable.

Question 7

Theory of Reasoned Action

Answer 7

Behavior is driven by intentions, influenced by attitudes and subjective norms.