Lecture 3 Flashcards
Heuristics, biases & bounded awareness (2)
boundend awerenes
Our minds are constantly making choices about what to pay attention to and what to ignore, but our information filters make some predictable mistakes. Often leads people to ignore accessible, perceivable, and important information.
Inattentional blindness
is the failure to notice a fully-visible, but unexpected object because attention was engaged on another task, event, or object.
Change blindness
When our behaviour becomes unethical one step at a time, we are less likely to notice what we are getting ourselves into and more likely to be able to justify the behaviour than if we abruptly drop our ethical standards.
focalism
describes the common tendency to focus too much on a particular event and too little on other events that are likely to occur concurrently. we overestimate the extent to which a current emotional state will persist into the future.
Bounded awareness in groups
Thus, while individuals’ awareness is bounded by the information they mentally consider, the awareness of groups is also bounded by the information that become part of the discussion.
Bounded awareness in strategic settings
we will provide evidence that minor changes in the decisions of others and the rules of the game can create huge differences in the optimal strategy for a negotiator.
Multiparty ultimatum games
bounded awareness keeps negotiators from failing to differentiate the problems. But those who note the important difference between two versions of the multiparty ultimatum game (unanimity and majority) are likely to do much better. Negotiators often overgeneralize from one situation to another
The Monty Hall game
A common but false analysis is that with only two doors remaining, the odds are 50-50. When Monty opens the first door to reveal a zonk, the probability (one-in-three) did not change
Understanding the bounds of others
One domain where this becomes clear is the question of how much choice to give one’s customers. When faced with too many choices, people may find the act of choosing to be mentally exhausting.
Winner’s curse
hus, if they do win, they are less likely to have overbid, or at least not by the same margin. Yet most people ignore the effects of uncertainty, even falsely viewing the presence of lots of bidders as a signal that they should be confident of the commodity’s value and quality.
Furnham & Boo
The literature indicates that, in decision making, the higher the ambiguity, the lower the familiarity, relevance or personal involvement with the problem, a more trustworthy source or plausible bid/estimate the stronger the anchoring effects.
The anchoring-and-adjustment heuristic
the heuristic maintains that anchoring bias is caused by insufficient adjustment because final judgements are assimilated towards to starting point of a judge’s deliberations.
Purn & van Herpen
We will provide a procedure to test consumer perceptions of a bonus package containing an oversized indication on the extra volume in the package to determine the extent to which such a label is deceptive to the consumer and an initial empirical demonstration.
The Mars case and the anchoring effect
In the Mars case, the bonus pack contains two potential anchors for the amount of extra volume that the package contains: the percentage provided on pack and the coloured part of the package.
