Lecture 11 (Biases)

Question 1

The representative heuristic

Answer 1

Probabilities are evaluated by the degree to which A is representative of B, that is, by the degree to which A resembles B.

Example of Steve the Liberian:
“Steve is very shy and withdrawn, invariably helpful, but with little interest in people, or the world of reality. A meek and tidy soul, he has a need for order and structure, and a passion for detail”
Is he a fighter-jet pilot, Farmer, salesman or librarian)? Steve is a librarian, for example, is assessed by the degree to which he is representative of, or similar to, the stereotype of a Librarian.

Question 2

Availability

Answer 2

Biases due to the retrievability of instances. When the size of a class is judged by the availability of its instances.

the probability of an event is judged by the ease to which one can recall instances or occurrences can be brought to mind.

Example: One may assess the risk of heart-attacks among middle-aged people by recalling such occurrences among one’s acquaintances.

Question 3

What are the four heuristic biases

Answer 3

Representativeness
Availability,
Anchoring and Adjustment

Question 4

Anchoring and adjustment

Answer 4

The situation in which people make estimates biased towards there starting point and then do not adjust sufficiently afterwards.

Example: the presentation of 87654321 and 12345678*9 under time pressures. People will tend to make a lower estimate of the ascending line of number and a higher estimates for the descending.

Weather forecasts or stockmarket prediction.