Lecture 9 - Decision Making Flashcards
What are the two types of decision making?
Maximising (best) vs Satisficing (good)
Schwatrz (2002) Recent purchase study
Asked participants to recall a recent purchase
> Maximisers (compared to satisficers) were more likely to report:
- taking longer to decide
- having a greater negative affect
- engaging in social comparison more
- greater regret
- less happiness
What is the WRAP process (Heath & Heath)?
W-iden your options
R-eality test your assumptions
A-ttain distance before deciding
P-repare to be wrong
Widen you options
Shift the spotlight and widen your focus:
> we tend to consider just a single option eg whether or not to eg should I buy the car or not?
> Instead, we should consider multiple options and ask smarter questions eg what is the best way to spend money to solve my transport options?
What techniques can you use to widen your options?
> The vanishing technique: what would happen if the option wasn’t there eg what would I do if I could not buy a car?
Opportunity cost: what else could you do with the money?
Using experience and seeing how others have solved it in the past
Multiple options in parallel and then judging them
Reality-test assumptions
Counteract the confirmation bias, which is where we make a decision and then find evidence to support it.
> Consider the opposite - play devils advocate and ask disconfirming questions
> Take the INSIDE VIEW (about you and what you are) and the OUTSIDE VIEW (real facts outside self)
Attain distance before deciding
Put emotion in perspective - detach yourself emotionally from the decision.
> What would you say to a friend in the same position
> Beware of the status quo bias - popularity - loss aversion (loss is worse than gain is good)
Prepare to be wrong
> Anticipate a range of outcomes good and bad
Set a trip-wire alert for you to reconsider:
- example of Kodak not wanting to enter the digital market
What is narrow framing in regards to widening your options?
When engaging in decision making processes we usually consider a single option and think of it as a whether or not option.
Instead, we should frame the question in a different way, looking at solving the problem as a whole and not just deciding on one singular option.
What are opportunity costs?
What are the other options that you could consider with your money.
eg. instead of paying a one-off cost of $20,000 for a car, you could look at über or taxi costs.
What is the vanishing options thought process with regards to widening you focus?
Vanishing options is considering what you would do and how you would solve the problem is the option wasnt there in the first place.
You are widening your spotlight and refocusing your attention.
What is the goal of reality-checking your assumptions?
You are looking to counteract the confirmation bias - this is where you make an early decision and then look to support this with cherry picked evidence.
When reality-checking your assumptions, what is the difference between inside and outside views?
Inside views are your own thoughts and feelings towards the decision.
Outside views are ones from things such as evidence and previous happenings (how things usually unfold)
How does the status quo bias affect our decisions?
When looking to distance yourself from the decision, the status quo bias can affect our decision; we may chose something that is socially desirably or due to its popularity, rather than its meaning to our core set of values.
How does loss aversion affect decision making?
When looking to distance ourselves from the decision, we should consider the power of loss aversion; you feel greater unhappiness when losing something compared to the feeling of happiness when acquiring something
