Psychological Approach to Beliefs Flashcards
what is narrow framing
what is confirmation bias
what is judgement heuristics
what is prospect theory
what is max prospect theory
what is attribution theory
how does confirmation bias work
when testing hypothesis, people look for confirming evidence
hypothesis -> evidence search -> belief
what is bounded rationality
constraints of available time, information and cognitive capacity limit human abiity to make rational decisions
what are heuristics and biases
mental shortcuts that help people make quick but less accurate decisions by focusing brains limited resources on most salient information
what are the three core judgmental heuristics
representativeness, availability and anchoring
what is representativeness heuristics
the more object x is similar to class y, the more likely we think x belongs to y
what is availability heuristics
the easier it is to consider instances of class y, the more frequent we think it is
what is anchoring heuristics
initial estimates values affect the final estimates, even after considerable adjustments
what kind of heuristic is recency bias
availability heuristic
example of representative heuristics
In financial markets, one example of this representative bias is when investors automatically assume that good companies make good investments. However, that is not necessarily the case. A company may be excellent at their own business, but a poor judge of other businesses.
example of availability heuristic
prioritizing infrequent events based on recency and vividness. For example, plane crashes can make people afraid of flying. However, the likelihood of dying in a car accident is far higher than dying as a passenger on an airplane
example of anchoring heuristic
if you first see a T-shirt that costs $1,200 – then see a second one that costs $100 – you’re prone to see the second shirt as cheap.
question to avoid availability heuristic
is the most available memorable information a good guide to the true risk?
question to avoid representative heuristic
is the resemblance of a person to a category a good guide to true ability?
question to avoid anchoring heuristic
is the number that you start with an accurate representation or is it deliberate manipulation?
what does representativeness lead to
1) non regressive prediction
2) extrapolation from small samples
3) perception of streaks in random walks (hot hand)
4) overconfidence when evidence is weak
what does availability lead to
1) extreme prediction
2) prediction bias
what does anchoring lead to
1) sticky bias from influential but irrelevant numbers/initial offering price
2) slow adjustment from misplacing
3) herd following from analysts
4) hindsight bias
what do all three heuristics focus on
the most salient or attention getting info
