Lecture 6 - CoMo

Question 1

What is prospect theory

Answer 1

Also known as loss aversion theory. It states that decision-making depends on choosing among options that may themselves rest on biased judgments.

Question 2

3 key features of prospect theory

Answer 2

Loss Aversion (we feel loss more than we feel gains), Diminishing Sensitivity, Adaptation levels

Question 3

When do people become risk-seeking?

Answer 3

When they’re certain to loose or uncertain of an outcome sometimes

Question 4

availability bias leads to affect bias

Answer 4

what comes to mind first sounds right –> The affect heuristic is an instance of substitution, in which the answer to an easy question serves as an answer to a much harder question

Question 5

Understand the 4 fold pattern of decision making preferences acting under certainty and possibility effects

Answer 5

Slide 32