Models of thinking in decision making + Bias

Question 1

Cognitive Bias

Answer 1

A systematic error in thinking that occurs when we are processing and interpreting information around us that affects the decisions we make.

Question 2

Cognitive Load + what happens if too high?

Answer 2

The used amount of working memory resources.

If cognitive load is too high, ego depletion may occur and we may be more prone to using System 2 thinking.

Question 3

Cognitive Misers

Answer 3

The theory that we tend to minimize the amount of effort to think.

Question 4

Ego Depletion

Answer 4

A loss of self-control or willpower when mental resources are used up.

Question 5

Heuristics

Answer 5

Mental shortcuts that can be applied to facilitate quick decision-making based on a more limited subset of available information. They help us to make decisions faster but are prone to biases.

Question 6

System 1

Answer 6

Automatic, intuitive, and effortless way of thinking that often employs heuristics. This mode of thinking allows for fast processing but are more prone to errors when our assumptions do not match the reality of a specific situation.

Question 7

System 2

Answer 7

Slower, conscious, and rational mode of thinking that is assumed to require more effort. This mode of thinking is slower because it involves careful thinking and rationalizing however it is less prone to bias.

Question 8

Dual Process Model

Answer 8

A model popularized by Tversky & Kahneman of thinking that explains how people think and make decisions using one of 2 systems: System 1 and System 2

Question 9

Anchoring Bias

Answer 9

The tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions.

Question 10

Tversky & Kahneman (1974)

Answer 10

Aim: To investigate whether the initial value (the “anchor”) in a multiplication question being high or low would lead to anchoring in product estimates.

Sample:
High school students

Research method:
True Experiment (participants were randomly allocated to conditions)

IV:
Whether initial value (the “anchor”) in the multiplication question was high or low.

DV:
The estimates of the product

Procedure:
Participants were divided into two groups: The ascending condition and the descending condition.

Participants in the ascending condition were asked to quickly estimate the value of
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8
in 5 seconds.

It was the same for descending condition however participants would have to estimate the value of
8 x 7 x 6 x 5 x 4 x 4 x 3 x 2 x 1

Findings:
The median for the ascending group was 512 while the median for the descending group was 2250. The actual product was 40320.

Question 11

Anchoring

Answer 11

During decision-making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.