MGT491 Mid Term Flashcards
System 1 thinking refers to:
a. Our intuitive system, which is typically fast, automatic, effortless, implicit, and emotional
b. Reasoning that is slower, conscious, effortful, explicit and logical
c. a single system whose sole function is to control our cardiovascular functions
d. none of the above
A
Which was of the following is NOT one of the primary steps in the PrOACT method of decision making?
a. Define the problem
b. Identity the objectives
c. Assess the emotional factors in the decision
d. Generate alternatives
e. Rate each alternative on each objective
C
What are the steps in PrOACT
Problem Objectives Alternatives Consequences Tradeoff
What part of PrOACT is when you carefully and be sure to state your decision problem carefully
Problem
What part of PrOACT is when the decision is a means to an end, you want to ask yourself what to accomplish in making this decision
Objectives
What part of PrOACT is when the response the different choruses of action you have to choose from, and think creatively in order to specify all possible alternatives
Alternatives
What part of PrOACT is when you make sure understand the outcome of each alternative
Consequences
What part of PrOACT is because objectives frequently conflict with one another
Trade offs
What is an intuitive system, fast, automatic, effortless, implicit, and emotional.
Most decisions made using this system
System 1
What is the reasoning that is slower, conscious, effort, explicit, and logical
System 2
- Detecting the one objective is more distant than another
- Orient to the source of a sudden sound
- Detect a hostility in a voice
- Drive a car on an empty road
System 1 Activities
- Brace for the starting gun in a race.
- Look for a woman with white hair.
- Telling someone your phone number
- fill out tax Form.
- Compare two washing machines for overall value
System 2 Activities
What is the idea that in decision making, rationality of individuals ins limited by the information they have, the cognitive limitations of their minds, and the amount of time they have to make decision.
Bound Rationality
Most people are only partly rational, and emotional.irrational in remaining part of their action
Boundly rational agents experience limited information and solving complex problem in processing
Herbert Simon
What is not
- optimization under constraints
- irrationality
Bounded Rationality
What it is:
*simple heuristic decision tools that are specific and effective in certain environments.
Fast, Frugal, and accurate decision rules.
Process by which we use to make decisions
- Fast
- not hard decisions
Bounded Rationality
What is a decision-making strategy that attempts to meet an acceptability theirs hold. This contracted with optimal decision making, an approach hat specifically attempts to find the best options available. May often be optimal if the costs of the decision-making process itself, such as cost of obtaining complete information, are considered in the outcome calculation.
Satisfice
What is it when if everyone in every organization were completely rational, they would not always make the best decision.
satisficing
What is a given the time, effort , and expense that must go into the process of generating and evaluation alternatives, and the decision-making process within manageable bounds and stops the process when an acceptable solutions have been identified.
Satisficing
In the context of bounded rationality, the term satisfice is defined as:
a. A decision maker will continue to search for the best solution and will not stop until she is satisfied that best solution has been found
b. Decision makers are often willing to forgo the best solution in favor of one that is acceptable or reasonable
c. Satisfice is research term used to measure how satisfied a decision maker is with a decision after the decision has been made.
d. Both A and C are correct
B
What is mental capacity, time, attention, information/knowledge
Bounded rationality
The fact that heavy advertising of a company’s or a product’s name on billboards and in the media makes that name stick in people’s memory as bearing high quality is an example of what bias?
a. Insensitivity to base rates.
b. Retrievability.
c. The conjunction fallacy.
d. Ease of recall.
E
What is when assessing the likelihood of events, individual, tend to ignore base rate.
insesitivity to base rates
What is an individuals are biased in their assessment of the frequency of event based on how their memory structures effects the search process.
Retriebability
What is an individual exhibits bias toward overestimating the probability of conjunctive events and understanding the probability of disjunctive events.
The conjunction Fallacy
What is an individual judge events that are more easily recalled from memory.
Ease of Recall
What is the applies when a decision maker must choose be between two or more prospects.
Expected Value
What says a decision maker should select the prospect with the highest expected value
Expected Values
What is a way to measure the relative merits of decision alternatives.
Mathematical combination of playoff and probabilities you calculate the expected value after all probabilities and play off value are identified.
Expected Values
Of 12 eggs are ordered every Thursday morning, in the long run, a profit of $4 will be realized in 1 week, a profit of $14 in 2, and a profit of $24 in 7 out of 10 weeks. What is the expected profit?
(4)(.1)+(14)(.2)+(24)(.7)=
.4 + 2.8 + 16.8
20
What is an economic term summarizing the utility that an entry or aggregate economy is expected to reach under any number of circumstance.
Expected Utility
What is calculated by taking the weighted average of all possible outcomes under certain circumstance with the weights being assigned by the likelihood, or probability, that any particular event will occur.
Expected Utility
Suppose one offer you the choice between the following two gambles:
Gamble A: Win $240 at 100%
Gamble B: Win $400 at 50%
Win $100 at 50%
Show that an expected value maximizer will choose What Gamble
Gamble B
EV of A: 240 (240)(1)
EV of B (.5)(400) + (.5)(100)
200 + 50
250
EUA is square root of 240 is 15.49
EUB (.5)(Square Root of 400) + (.5)(Square Root of 100)
(.5)(20) + (.5)(10)
10 + 5
The choose is B because gamble B is lower
What is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower expected payoff.
Risk Aversion
What type of decision maker choose to put their money into a bank account with a low but guaranteed interest rate, rather than into a stock that may have expected return but also involves a change of losing value
Risk Aversion
The utility of $40 for sure is worth more that a 50% chance at $80. What type of decision maker is this type of person
Risk Aversion
(u)80= 66
(80)(.5) + (0)(,5)
33+0
33
What is the preference are neither risk averse or risk seeking. This type of decision maker party decision are not affected by the decree of uncertainty in the set of outcomes, so a risk neutral party is indifferent between choices with equal expected payoff even if one choice is riskier.
Risk Neutral
The utility of $40 for sure is worth more than a 50% chance at $80. What type of decision maker is this type of person
Risk Natural
U(80)
(80)(.5) + (0)(.5)
40 + 0
40
40=40
What type of decision maker is a person who has a preference for risk.
*Under uncertainty is ofter characterized as the maximization of expected value
Risk Seeking
The utility of $40 for sure is worth more than a 50% chance at $80. What type of decision maker is this person
Risk Seeking
U(80) = 93
(93) (.5) + (0)(.5)
46. 5 + 0
46. 5
What is a paradox related to probability theory and decision theory.
- it is based on a particular (theoretical) lottery game that leads to a random variable with infinite expected value
- is a classical situation where a native decision criterion (which takes only the expected value into account) would recommend a course of action that no rational person would be will to take.
St. Petersburg Paradox
What is the statistical process for estimating the relationship among variables
- is widely used for prediction and forecasting where its used has substantial overlap with the field machine learning.
- also used to understand which among the independent variables are related to the dependent variable.
Regression Analysis
What is the values of money with a given amount of interest earning or inflation accrued over a given amount of time.
Time Value of Money
What is the current worth of a future sum of money or stream of cash flow given a specified rate of return.
Present Value
What is the value of an asset or cash at a specific date in the future that is equivalent in value to a specific sum today.
Future Value
Consider an investment that will pay $680 per month for the next 15 years and will be worth $28000 at the end of that time. How much is this investment worth to you today @ 5.25% discount rate?
P/y= 12 N= 15*12= 180 I= 5.25 PMT= 680
FV= 28000 PV= -97351.34
What is a decision support tool that is uses a tree-like graph or model of decision and their possible consequences including chance event outcomes, resource costs, and utility.
Decision Tree
Which of the following can serve as a cognitive explanation for misconceptions of chance?
a. People expect probabilities to even out.
b. People remember unusual sequences better than ones that appear more random.
c. People judge probabilities of future events as contingent on past events.
d. All of the above.
D
What is an individual expect that a sequence of data generated by a random process will look random even when sequence is too short for those exceptions.
Misconception of chance
What is a cognitive bias according to which better informed people find it extremely difficult to think about problems
The curse of Knowledge
What is an individuals tend to seek confirmatory information for what they think is true and fail to search for dis confirmatory evidence.
The confirmation Trap
What is the tend to be overconfident of the correctness of their judgment, answering difficult questions.
Overconfidence
Drake is a department manager in a company which has recently decided to hire a new analyst. After interviewing all candidates, Drake recommended the company hire Anne, but senior management preferred to hire Beth. Drake argued that Beth is an inferior choice, but agreed to accept her for a trial period of six months. At the end of the trial period, Drake evaluated Beth’s performance as poor. Although this evaluation may have been fair, it is also possible that it was biased by:
a. The curse of knowledge.
b. The confirmation trap.
c. Overconfidence.
d. Misconceptions of chance.
B
The human mind is better at remembering information that is
a. Interesting.
b. Emotionally arousing.
c. Recently acquired.
d. All of the above.
D
When negotiating for salary with a future employer, it is wise to make an initial offer that is ______, because of the anchoring bias
a. Low
b. High
c. It is best not to make the first offer
d. None of the above
B
What describes the inferences we make about event commonness based on the ease with which we can remember instances of that event
Availability Heuristic
What assess the frequency of a class or the probability of an event by the ease with which instances or occurrences can be bought to mind.
Availability Heuristic
What is an individuals judge events that are more easily recalled from memory, based on vividness or recency, to be more numerous than events of equal frequency whose instances are less easily recalled
Easy of Recall
What is an individuals are biased in their assessments of the frequency of events based on how their memory structures affect the search process.
Retrievability
What is it when making a judgement about an individual people tend to look for traits an individual may have that correspond with previously formed stereotype.
Representativeness
When assessing the likelihood of events individuals tend to ignore base rate if any other descriptive information is provided.
Insensitivity to Base Rate
When assessing the reliability of sample information individual frequently fail to appreciate the role of sample size
Insensitivity to Sample Size
When is the individual expect that a sequence of data generated by a random process will look random even when the sequence is too short for those expectations to be statistically valid.
Misconceptions of Chance
When an individuals tend to ignore the fact that extreme events tend to regress to the mean on subsequent trails.
The regression to the Mean
When an individual falsely that conjunctions are more global set of occurrences of which the conjunctions is a subset.
The conjunction fallacy
What is a winning streak, a lucky spell
Hot Hand
Whats is the mistaken belief if something happens more frequently than normal during some periods, then it will happen less frequently in the future.
Gambler’s Fallacy
What relates the conditional and marginal probabilities of events A and B,, where B has non-banishing probability
Bayes Theorem
What is a tendency to search for or interpret new information in a way that confirms one’s preconceptions and avoids information and interpretations which contradict prior beliefs.
Confirmation Heuristic
When is an individual tends to seek confirmatory information for what they think is true and fail to search for disconfirmatiory evidence.
The confirmation Trap
When is the individual makes estimates for values based upon an initial value an typically make insufficient adjustments form that anchor when establishing a final value
Anchoring
When is the individual exhibit a bias towards overestimation the probability of conjunctive event and understanding the probability of disjunctive events
Conjunctive and disjunctive event bias
After finding out whether or not an event occurred individuals tend to overestimate the degree to which they would have predicted the correct outcome
Hindsight and the curs of Knowledge
When an individuals tend to be overconfident of the correctness of their judgments, especially when answering difficult questions.
Overconfidence
What is the the sequence of three numbers below follows a rule and that your task is to diagnose the rule creating the number 2,4,6
*Find the difference from right and wrong.
Confirmation Trap
What is a mental shortcut that allows people to make decisions and solve problems quickly and efficiently, in which current emotion, fear, pleasure, surprise, influences decision
Affect Heuristic
What is causes the tendency to be too sure our judgement and decisions are correct leads to overly narrow confidence intervals.
Over precision
What is a desire to relieve internal dissonance, outward expression of confidence help others feel sure about us, we search in our memory for confident we are correct.
Over precision
What is:
- We error but are rarely in doubt
- Relevance to take advice
- Suspicious of those whose view differ from our own
- Too Quick to Act
- to slow to update erroneous beliefs
Consequence of over precision
What describes the common human tendency to rely too heavily on the first piece of information offered when making decisions
Anchoring Bais
What type of anchor could bring the ultimate salary offer up.
High Anchoring
What is the tendency to think you are better across a number of domination then you actually are.
Overestimation
What are people that are motivated to see themselves positively vs. accurately
Self-enhancement
What are people thinking when they have more control over circumstance than they actually do
Illusion of Control
What is the common tendency to overestimate the speed at which we will complete projects and tasks.
The planning fallacy
The overestimate the rosiness of our future
Optimistic biases
What is the tendency to believe that we are better than others in specific ways when we’re actually do.
Overplacement
We tend to ______________ on easy task and _______________ on hard task
over placement
under placement
What is:
*classes whose instance are more easily retrievable will seem larger.
- ex. judging if a list of names had more men or woman depends on the relative frequency of famous names
- based upon memory structures
Retreivability Bias
What is a biases that causes people to believe that they are less at risk of experiencing a negative event compared to others
Optimistic Biases
These are four factors that cause what biases
- Their desired and state
- Their congestive mechanisms
- The information they have about themselves vs others
- overall mood
Optimistic biases
These are consequences that result from what
- positive events often lead to feelings of well being
- self-esteem, while negative events lead to consequences involving more risk.
- such as engaging in risk behaviors and not taking precautionary measure for safety
Optimistic Biases
What is the inclination to see events that have already occurred as being more predictable than they were before they took place
Hindsight Bias
What is a tendency to change a recollection from an original thought to something different because of newly provided information, and reduces our ability to learn from the past and evaluate decision objectively
Hindsight
What is a cognitive bias according to which better-information people find it extremely difficult to think about problems from the perspective of lesser-infrared people
Curse of Knowledge
What is it that has been suggested that the cures of knowledge could contribute to the difficulty of teaching
Curse of knowledge
What is it when people have prevents them from noticing or focusing on useful, observable and relevant data
Bound Awareness
What is a failure to see, seek, use , share information
Bound Awareness
What is ti when people have a tendency not to see what they are not looking, for even when they are looking directly at something
In attentional Blindness
What is a psychological phenomenon that occurs when a change in a visual stimulus goes unnoticed by the observer.
Change blindness
What is the tendency to focus too much on a particular event and too little on other events that are likely to occur concurrently people tend to overestimate both the degree to which their future thought will be occupied by the focal event and the duration of their emotional response to the event
Foclism
What is the tendency of people to make judgments based on their attention to only a subset of available information, too overweight that information, and the underweight unattended information
Focusing illusion
What is it when groups tend to discuss more shared than unshared information
Bounded Awareness in Groups
What is a group that created to share information , yet they end up spending their time discussing already shared information
Paradox
What is recognition of information silos and mechanisms for sharing expertise
Solutions
What is the behavioral economic theory that describes the way people chose between probabilistic alternatives that involve risk
Prospect Theory
When people that make decisions based on the potential value of losses and gains rather then final outcome, and threat people evaluate these looses and gains using certain heuristics.
prospect Theory
What is:
- the value function replaces the utility curve
- Risk aversion is implied in the domain of gains
- Risk seeking implied in the domain of losses
Prospect theory
What is the way in which a consequence is present
Framing
What proposes that decision makers actively frame or construct the decision problem.
Prospect theory
What is the type of risk that occurs when a financial model used to measure a firm’s market risks or value transaction dose not perform the task or capture the risk it was designed to
Modeling Risk
What is it when considered a subset of operational risk, as model risky mostly affects the firm that creates and uses the model
Modeling risk
What is the degree to which results from a specific sample represent the actual conditions in the population from which the sampling was drawn
Sampling uncertainty
This is an example of what?
Monte Carlo simulation has been used to evaluate more traditional measure
Influence the consequences of any alternative
Potential impacts, narrow uncertainties down to are likely to matter most
Uncertainty in a Decision Tree
A publisher wants to bid for the rights to publish a celebrity’s memoir. There is high uncertainty as to how many books will sell. The publisher would be better off to:
a. Bid higher than what they think the book is worth, to avoid the winner’s curse.
b. Bid lower than what they think the book is worth, to avoid the winner’s curse.
c. Enter the bid early, in order to reduce uncertainty.
d. Enter the bid late, in order to reduce uncertainty.
B
What is that one side often has much better information than the other side, the party with the better information is usually the seller.
Winner’s Curse
The most critical barrier to a creative decision is:
a. System 2 thinking.
b. The failure to recognize subtle changes in the situation.
c. The failure to assign appropriate weight to information that is not readily available.
d. A narrow definition of the problem space.
A
In creative problem solving, composing a group of people, each with unique knowledge and perspective, is usually enough to avoid the problems of bounded awareness.
a. True
b. False
False
The overall goal is to recognize the tendency of groups to have bounded awareness of unshared information and create structures to overcome this tendency
Bounded Awareness
Groups have a tendency to focus on _________ information, at the expense of _____________ information.
a. unique, shared
b. shared, unique
c. general, specific
d. specific, general
B
What has a consistent tendency to focus more on shared information (information the group already has than on unique or unshared information known by only one group member
Groups have tendency
What explanation does the book provide for the fact that people are loss-averse, but still accept the sure loss of paying insurance?
a. The vividness of the possibility of losing a big amount of money if they are uninsured leads people to overestimate their risk.
b. The special value pseudocertainty has.
c. Social norms that favor having insurance.
d. All of the above.
D
- Which is true regarding the omission bias:
a. Pharmaceutical firms are not held liable for harms caused by commission.
b. Actions resulting in failure generate more regret over time.
c. Harms of commission are easier to ignore.
d. Implementing an opt-out organ donation program can save more lives than are saved today by organ donations.
B
What is the tendency to judge harmful actions as wore, or less moral than equally harmful in action due to the fact that actions are more obvious that interaction
A
What is the implies that losses hurt more than gains. Resent estimates suggest that a loss hurts about 2X as much as gain
Loss Aversion
Since losses loom larger than gains, a big loss upsets us more than two smaller losses of the same total amount.
a. True
b. False
A
What is it when people react differently to a particular choice depending on whether it is presented as a gain and loss.
Framing
When a positive frame is presented but seek risks when a frame is presented.
Avoid Risk
According to prospect theory, in choices that involve uncertainty, our judgments are affected not only by the framing of the choice in terms of the level risk, but also by the framing of the choice in terms of gains or losses.
a. True
b. False
A
Which of the following is consistent with the “endowment effect?”
a. Buyers of homes usually think they are worth more than the sellers
b. Sellers of homes usually think they are worth more than buyers
c. Most homes sell because buyers and sellers value them at the same price
d. None of the above
b
What is the hypothesis that people ascribe more value to things merely because they won them
Endowment Effect
What is this an example of why so many home sellers set an inappropriately high value on their homes and find themselves without any bidders.
Endowment Effect
What refers to the tendency for people to strongly prefer avoiding losses than acquiring gains.
Loss aversion
What implies that losses hurt more than gains. Recent estimates suggest that a loss hurts about 2 times as much as a gain
Loss Aversion
What holds that the psychological impact of a marginal change will decrease moving further away from a reference point.
Diminishing sensitivity to losses
Inner city crime in the U.S. gets considerable media coverage, such that every homicide is reported in the news. In contrast, a story of a person who died from a heart attack rarely makes the news. This leads people to overestimate the frequency of deaths due to homicides relative to those due to heart failure.
a) The representativeness heuristic.
b) The availability heuristic.
c) Positive hypothesis testing.
d) The affect heuristic.
b
What is it when people tend to look for traits the individual may have that correspond with previously formed stereotype
Representativeness heuristic
What is the people accesses the frequency, probability, or likely causes of an went by the degree to which instances or occurrences of that event are already available in memory
The Availability heuristic
What is it when you can trigger the hindsight bias which we too quickly dismiss in retrospect the possibility differently.
Positive hypothesis testing
What is to be used when people are busy or under time constraints.
The affect Heuristic
John is over seven feet tall. When asked whether John is a professional basketball player or a software programmer, many people predict the former, even though there are many more software programmers, even very tall ones, than professional basketball players.
a) The representativeness heuristic.
b) The availability heuristic.
c) Positive hypothesis testing.
d) The affect heuristic.
A
Which of the following can serve as a cognitive explanation for misconceptions of chance?
a. People expect probabilities to even out.
b. People remember unusual sequences better than ones that appear more random.
c. People judge probabilities of future events as contingent on past events.
d. All of the above.
D
In order to avoid falling prey to ease of recall bias, a manager must discount the number of successful and unsuccessful actions taken by employees situated closer to the manager, relative to those of employees who are farther away.
a. True
b. False
A
What is vivid instances of an employee’s behavior(either positive or negative) will be most easily recalled form memory.
- Therefore be weighted more heavily in performance appraisal
- Weight employee’s performance immediately prior to the evaluation than to the previous nine months.
Recall bias
How can the ease of recall bias explain the high rate of restaurant openings, despite the known fact that about 80% of new restaurants close within one year?
a. It is easy to remember a good meal, good meals make us happy, and entrepreneurs believe they can make people happy.
b. Success stories are more vivid in our memory, thus are more easily recalled. This causes entrepreneurs to believe the likelihood of success of their ventures is higher than it actually is.
c. It has to do with the “it can’t happen to me” bias.
d. None of the above
B
What is it when an individual judge event that are more easily recalled from memory, based on vividness, to be more numerous than events of equal frequency whose instances are less easily recalled.
Ease of recall
What is the states that a relatively small first step leads to a chain of related events culminating in some effect.
Slippery slop theory
What is it when an individuals pay inordinate attention to the signal, and neglect diagnostically and transition probability the aspect of the system.
System neglect
What is a psychological phenomenon that occurs when a change in a visual stimulus goes unrolled by the observer.
Change blindness
What provide broader evidence in perceptual experiments that people have a tendency not to see what that are not looking for even when they are looking directly at it.
In attentional blindness
Which of the following biases is most related to the Slippery Slope theory?
a. System neglect
b. Reference group neglect
c. Change blindness
d. Inattentional blindness
C
In creative problem solving, composing a group of people, each with unique knowledge and perspective, is usually enough to avoid the problems of bounded awareness.
a) True
b) False
B
What explanation does the book provide for the fact that people are loss-averse, but still accept the sure loss of paying insurance?
a. The vividness of the possibility of losing a big amount of money if they are uninsured leads people to overestimate their risk.
b. The special value pseudocertainty has.
c. Social norms that favor having insurance.
d. All of the above.
D
A rational valuation of an asset is based on:
a. What the asset is currently worth on the market.
b. The time that had passed since purchasing the asset, including depreciation.
c. What the asset cost at the time it was purchased.
d. The transaction utility of the purchase.
C
What is the process of estimating what something is worth.
Valuation
What models determine value based on the observation of market price.
Relative Value model
What determine the present value
Absolute Value Model
What is to the quality of the deal that you receive evaluated in reference to “what the item should lost”
*Not rational”
Transactional Utility
A firm has exceeded its revenue forecast for the year, and wishes to share some of the surplus with its employees. Which of the following schemes is likely to generate higher levels of satisfaction from the employees?
a. Giving bi-monthly bonuses, with the each bonus slightly smaller than the previous one.
b. Giving bi-monthly bonuses, with each bonus slightly larger than the previous one.
c. Giving bi-monthly bonuses of equal amounts.
d. Giving one big bonus at the beginning of the year.
D
Since losses loom larger than gains, a big loss upsets us more than two smaller losses of the same total amount.
a. True
b. False
A
Since losses loom larger than gains, a big loss upsets us more than two smaller losses of the same total amount.
a. True
b. False
A
In negotiations, the endowment effect creates a bias primarily in seller’s evaluations.
a) True
b) False
A
What is it that people tend to overvalue what they own.
Endowment effect
According to the “multiple-selves” theory, if an online DVD rental service could offer same-day deliveries, so that people who order a movie receive it the same day, what change is likely to happen to the rental profile?
a. More documentaries and art films will be rented and fewer comedies and action movies.
b. More comedies and action movies will be rented and fewer documentaries and art films.
c. More documentaries and art films will be rented, but fewer will actually be watched.
d. More comedies and action movies will be rented, but fewer will actually be watched.
C
Cognitive neuroscience research has refuted the “multiple-selves” theory, finding that both short-term and long-term gratifications activate the same regions in the brain.
a) True
b) False
B
What has different brain areas are activated when consider either immediate rewards we want or larger delayed reward we should choose.
Multiple-selves
What is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity
Time Value of Money
What is the current value of a future amount of money a series of payment, evaluated at a given interest rate.
Present Value
Relative to the present time period, people tend to view all gains and losses in the future to be worth less than they would be in the present.
a) True
b) False
A
The extent to which people can maintain positive illusions about themselves is not limited by how unrealistic these beliefs are.
a) True
b) False
A
What are unrealistically favorable attitude that people have towards themselves or to people that are close to them.
Positive illusions
When people regard themselves more positively than they regard others and less negatively than other and less negatively than other and less negatively.
Above average effect
What is an exaggerated assessment of the individual’s personal control over environment circumstances such as the roll of the dice or flip of coin
Illusion of control
What is a tendency for people to overestimate their likelihood of experiencing a wide variety of pleasant events.
Optimism bias
What is framing means that the way a person subjectively frames a transaction in their main will determine the utility they receive or expect.
Mental accounting
What shows that people have a variety of mental accounts that they use to organize evaluate, and keep track of variety of financial activities
Mental Accounting
What is the typical decision maker evaluates outcomes relative to a neutral point.
Reference Point
In Prospect theory and the value function what has a concave value function is implied in the domain of gains
Risk aversion
In Prospect theory and the value function what has a convex value function is implied in the domain of losses.
Risk seeking
What represents the impact of the relevant probability on the valuation of the prospect.
Weighting Function
In Prospect theory and the value function what is a sure thing is over weighted in comparison with events of moderate or high probability.
Pseudo-Certainty
In Prospect theory and the value function at the low end of the scale, there is a sharp drop off between an event
Discontinuity
What is it when Stimuli for which an animal including humans will work.
Rewards
What is it when Stimuli that an animal will work to escape or avoid.
Punishes
What can be defined as states elicited by rewards and punishments.
Emotions
What is the proposes a mechanism by which emotional process can guide behavior, particularly decision making.
Somatic Marker Hypothesis
What is the hypothesis suggests that emotions can serve as stimuli that activate a physiological response in the brain that creates a somatic state that directs our decision of how to act.
Risk-as-Feelings
What is it when highlights the role of affect experienced at the moment of decision making
Risk-as-feeling
What are emotions that are expected to b e experienced in the future.
Anticipated emotions
What are the immediate visceral reactions to the risks and uncertainties inherent in the decision under consideration.
Anticipatory emotions
What states that when you are with your friends, you are one type of person, and when you’re around your parents, you’re a different type of person
Multiple selves theory
What is is a subjective, conscious experience characterized primarily by psychophysiological expressions, biological reactions, and mental states.
Emotions
What is is often associated and considered reciprocally influential with mood, temperament, personality, disposition, and motivation
Emotions
