Judgement and decision making

Question 1

homo economicus (ideal decision maker)

Answer 1

a person who behaves in exact accord with her rational self-interest

Question 2

steps for making decisions

Answer 2

identify all alternatives, determine consequences, compare consequences, choose best

Question 3

heuristics

Answer 3

mental shortcuts that serve as guides to making judgements and decisions without having to make calculations

Question 4

downfalls of heuristics

Answer 4

lead to wrong decisions that are wrong, bias responses that can reflect underlying rules

Question 5

bounded rationality

Answer 5

we are cutting corners to adapt to complexities of environment and limited time

cognitive limitations prevent us from being fully rational

Question 6

loss aversion

Answer 6

we switch preference to see ourselves losing money, become more risky -> hold onto stock longer to avoid seeing losses

Question 7

gambler’s fallacy

Answer 7

a random event is more likely or due after repeated amount of results (red more likely after getting 7 blacks)

Question 8

hot hand effect

Answer 8

when people are doing well, they get confident in them and their continued success

Question 9

apophenia

Answer 9

tendency to oversee patterns and derive meaning when there are none

Question 10

dirty sock superstition

Answer 10

deeming something lucky because something good happened

Question 11

pareidolia

Answer 11

type of apophenia, perceiving meaning in ambiguous images usually faces (visual or auditory)

Question 12

Do we attend to and remember information that is consistent or not consistent with our beliefs

Answer 12

consistent

Question 13

motivated skepticism

Answer 13

people are motivated to accept facts that are consistent with their beliefs

Question 14

confirmation bias

Answer 14

favoring information consistent with your belief

Question 15

regression to the mean

Answer 15

when samples seem extreme, next samples seem to be closer to the mean (and appear to be better or worse than streak)

Question 16

Do people tend to be biased towards the default?

Answer 16

yes

Question 17

When are people are more likely to chose the default?

Answer 17

near the end of decisions

Question 18

system 1 thinking

Answer 18

quick, intuitive, gut thinking

Question 19

system 2 thinking

Answer 19

rational deliberate, careful, slow thinking

Question 20

superstitions and conspiracies

Answer 20

errors we make when we see patterns that dont exist

Question 21

How can we oversee patterns?

Answer 21

use system 2 thinking

Question 22

law of small numbers

Answer 22

incorrect belief that small samples ought to resemble the population from which they are drawn

Question 23

clustering illusion

Answer 23

tendency to erroneously consider inevitable “streaks” or “clusters” arising in small samples from random distributions to be non-random (i.e. 5 heads in a row does not seem random)

Question 24

what does cognitive reflection test distinguish between

Answer 24

system 1 and 2 thinking

Question 25

After bringing people in to test for disease, what did those do when the paper did not change indicating they were unhealthy?

Answer 25

keep dipping paper (trying to disprove)

Question 26

what do people often do when presented with something that disagrees with their belief?

Answer 26

disprove it

Question 27

how to change beliefs?

Answer 27

talk to people you trust and respect with different opinions