Lecture 21: Decision Making II

Question 1

Extrasensory Perception:

Answer 1

• Sequences that you think will look random will never think TTT or HHH, so HHT, TTH, or HTH are chosen
• Evidence for people’s mind choosing randomly than not

Question 2

Intuitions about Chance:

Answer 2

• If the process is random then every small sample is expected to look random
• 31, 32, 33, 36, 37, 29
• Same likelihood as:
• 5, 11, 24, 29, 33, 39

Question 3

Two Hospitals in a town, one has 45 births a day, other has 15. Which hospital recorded more days on which over 60% of births were males?

Answer 3

• Same = 56%
• Larger = 24%
• Smaller = 20% (correct)
• The less people there are, the likelihood of a larger percentage

Question 4

Another mistake that can happen when making decisions include….

Answer 4

• Misreading samples (ignoring sample size)
• Gambler’s Fallacy
• Examples of biases in judgement resulting from the operation of the representativeness heuristic

Question 5

What is the Gamblers’ Fallacy:

Answer 5

• If something happens more frequently than normal during some period, it will happen less frequently in the future, or that, if something happens less frequently than normal during some period, it will happen more frequently in the future (presumably as a means of balancing nature)

Question 6

Is there such a thing as ‘streak shooting’?

Answer 6

• 91% basketball fans said ‘yes’

- But actually : mostly equal %

Question 7

The Sunk Cost Effect is the tendency to….

Answer 7

• Continue with an endeavour once an investment of time, effort, or money has been made

Question 8

Examples of the sunk cost effect:

Answer 8

• Waiting on the phone
• Sitting through a bad movie or play
• Clyde Dam project; Vietnam war
• Relationships
• Car Repairs
• Motivated by a desire not to ‘waste’ prior investments

Question 9

Entrapment is where:

Answer 9

• A decision making process whereby individuals escalate their commitment to a previously chosen, though failing course of action in order to…‘make good’ on prior investments

Question 10

Entrapment can be used positively for example…

Answer 10

• Make it difficult to quit
• Focus on the past (‘your journey’)
• Social support and competition
• Ignore future costs

Question 11

Are we fatally flawed decision makers?

Answer 11

• “Human incompetence is presented as a fact, like gravity”

Question 12

Simple _______ and decision strategies can lead to _______ almost as good as _______ strategies. Complex strategies ______ under stress and time pressure, but heuristics ______.

Answer 12

• Heuristics
• Outcomes
• Complex
• Degrade
• Don’t

Question 13

Decision Making is a vast and complex topic….

Answer 13

• People make many systematic errors in judgement
• Our intuitions about chance and likelihood are often incorrect
• Our prior decisions can trap us
• Decision processes are generally adaptive and smart