Midterm Review Flashcards
independant variable
The variable that is changed across conditions (by the researcher)
Plotted on x axis
e.g. in an experiment assessing asthmatics response time to ventolin dose, the dose of ventolin is the independant variable
Dependant variable
The outcome variable that is being measured
‘Dependant’ on independant variable
plotted on y axis
e.g. in an experiment assessing asthmatic response time to ventolin dosing, the response time to treatment is the dependant variable
Key points of Prospect Theory (3)
1) Malleable reference point - an individual views consequences in terms of changes from a reference level (status quo bias)
2) Individuals are loss averse - dysutility associated with a loss is larger than the utility associated with a gain of the same magnitude
3) Risk adverse - we are risk adverse when in gains mindset, risk seeking when in loss mindset
Implications of prospect theory (8)
1) Loss aversion - more dysutility from a loss, than utility from equal gain. e.g. consumers are more sensitive to price increases (loss) than price cuts (gain)
2) Loss framing - loss frame is much more motivating
E.g. credit card script example framing same decision as a loss vs. gain drastically changes outcome (loss frame much more motivating)
3) Reference dependance - reference point is malleable
E.g. Tiger woods is risk adverse
4) Expressions case - framing something as a ‘credit surcharge’ (loss) vs. a ‘cash discount’ (gain) makes consumers more likely to use cash
5) Risky prospects
6) Endowment effect - once you have something, foregoing it feels like a loss (and we are loss adverse)
7) Status quo bias - current baseline is seen as the reference point, and any change from that is perceived as a loss
8) Good news, bad news - better to integrate losses, and separate gains
Anchoring bias
we develop estimates based on an initial anchor (based on our available information) and adjust from there
E.g. have you seen more or less than 51 owls in your life? How many owls have you seen in your life?
Avaliability bias
Relies on examples that immediately come to mind
e.g. deadliest animal, immediately instinct is shark, when actually it is mosquito
Ease of Recall bias
ease of mental retrieval is used as proxy for likelihood/frequency
e.g. seeing all headache patients and thinking brain tumour
Misconceptions of chance bias
failure to recognize independance of events
e.g. HTHTTH vs. HHHTTT have equal probability
Inattention to mean regression bias
If any element of performance is random, extreme performers will regress to mean
We tend to overweight past performance in forecasting
e.g. intersection with high number of crashes, will likely regress to mean
The Curse of knowledge bias
once we have information, we find it nearly impossible to ignore it
e.g. jurors cannot ignore information already presented to them in court
Hindsight bias
It seems obvious in hindsight that an unpredictable event would happen
Present bias
individuals are more likely to chose want options over should options the sooner their choices will take effect
e.g. selecting groceries in advance to eat in a week, more likely to make healthy choices
Factors that influence want vs. should decisions
1) The fresh start effect
2) Cognitive load
3) Future lock in 0 choice now for future implementation
4) Licensing - giving yourself permission to make want choice, because in the future you will exert willpower (e.g. video rentals, choice of want movie, vs. should)
Commitment devices
tools used by a ‘planner’ to prevent the ‘doer’ from exhibiting present bias
e.g. antabuse for alcoholics
Define procedural justice
the way a decision was made
