Judgment + Decision-Making Flashcards
Decision-making is _____ amongst ______
choosing, alternatives
Properties of a decision include ….
1) ______ alternatives
2) Future _______ / different _____
3) Different ______
Mutually exclusive, consequences, courses of action, values
Expected Value is the …..
average cost of winning + average cost of losing
St. Petersburg Paradox -> the assumption is the casino has _______
unlimited resources,
St. Petersburg Paradox Example: Toss a _____ coin. If tail appears game _____. If heads appears 1st time you get _____, after that for every heads the pot is _____. How much ______ you pay the casino for ______ that game?
fair, ends, 2$, doubled, would/should, entering
Expected Utility Theory states most people don’t behave according to a …..
normative model
Expected Utility Theory : we need to modify the idea of ______ in order to account for real ______ = ______
expected value, human behavior, Subjective expected utility
Subjective Expected Utility is the ______ that an outcome or activity _______ to an individual
value, actually has
Subjective Expected Utility Example: a gain of 10$ for a kid is _____, but _____ for an adult
a lot, not
Risk Aversion/ Seeking is a _______ approach
descriptive
Loss Aversion is a ______ approach
descriptive
People are risk _____ in the domain of ______
averse, gains
People are risk seeking in the domain of _____
losses
risk averse is to ….
go for the sure thing
risk seeking is to ….
try not to lose
People do not behave …..
normatively
A _____ of a given size is more painful than a _____ of the ______ size is pleasurable
loss, gain, same
Cumulitive Prospect Theory describes how people make _______ when presented with alternatives that involve ______, _______, and _______.
decisions, risk, probability, uncertainty
Cumulative Prospect Theory is a _______ approach
descriptive
Heuristic Biases are ______ approaches
prescriptive
Heuristics is why some people make ….
judgement errors
Representative Heuristic is the _____ probability of something is determined by the extent to which it seems _____ to its ______ and/or seems to ______ the ______ of how it was generated
subjective, similar, parent population, reflect, salient characteristics
3 Heuristics include ……
1) Representativeness Heuristic
2) Availability Heuristic
3) Anchoring and Adjustment Heuristic
______ in judgments reveal some heuristics of _______ under ______
Biases, thinking, uncertainty
Representativeness Heuristic Biases include …
– The Gambler’s Fallacy
– The Conjunction Fallacy
– Base Rate Neglect
– Ignoring the sample size
Gambler’s Fallacy is _____ a sequence as more ______ than another
misjudging, “random”
With Gambler’s Fallacy there is a belief that an ______ that hasn’t happened yet is _____.
outcome, “due”
Base Rate Neglect is when people are ______ base rates and relying on the ______ heuristic
ignoring, representativeness
With Base Rate Neglect, people _____ to consider the overall ______ of something.
fail, likelihood
Conjunction Fallacy is the belief that it is more ______ that two events occur ______ then for one event to occur ______.
probable, together, alone
Base Rate Neglect is a major problem in …
medical diagnosis
Availability Heuristic is classified as
judjment
Availability Heuristic is estimating ______ from the ______ with which instances come to ______.
probability, ease, mind
With Availability Heuristic the _____ of recall is sometimes a good _____ to ______, but _____ always
ease, clue, probability, not
Availability Heuristic: we base ______ estimates on how ______ it is to ______ examples
frequency, easy, retrieve
Availability Heuristic: ______ leads to overestimation
familiarity
Anchoring & Adjustment Heuristic is driven by ______ that are generally ______, and the initial ______ bias the _______
adjustments, inadequate, anchors, estimate
Common argument is that people are biased because they use ______ that often work _____, but sometimes ______.
heuristics, well, do
not
Using heuristics is argued to be _____ and ______
fast, “easy”
