Thinking

Question 1

What are the 2 types of self?

Answer 1

experiencing self and remembering self

Question 2

What is experience utility?

Answer 2

hedonic experience

theory of ethics

Question 3

What is decision utility?

Answer 3

wants and desires
based on memory
economic utility theory

Question 4

What are the two systems for decision making?

Answer 4

1; fast, automatic, no voluntary control

2; slow, allocation of effort, complex computations

Question 5

What are the most influential factors for system 1?

Answer 5

unconscious ones; you are not aware of them e.g. associating actions with words - there is a disinclination to believe their effect on actions as system 2 is not aware

Question 6

What are some problems with system 1?

Answer 6

relies on cognitive ease; takes things at face value which can lead to illusions of truth
very susceptible to priming effects
it is insensitive to quantity and quality of information

Question 7

What are the main features of system 2?

Answer 7

it makes logical decisions but is lazy and easily fatigued

recognises the errors made by system 1

Question 8

What is substitution in relation to decision making?

Answer 8

substituting a simpler heuristic question for a harder one which may lead to incorrect/incompatible judgements

Question 9

What is the halo effect?

Answer 9

when a persons overall impression of a person is based on the wrong aspects e.g. height

Question 10

What can cause fast decisions to go wrong?

Answer 10

the halo effect
judgements about unfamiliar items
judgements made of of context
judgements made under stress

Question 11

What is William James theory of thinking?

Answer 11

there is distinction between associative thought and reasoning

Question 12

What is Newell and Simon theory of thinking?

Answer 12

distinction in problem solving between heuristic and algorithmic methods

Question 13

What is Over and Evans theory of thinking?

Answer 13

two types of rationality; logic and goal oriented

Question 14

What is Wysiati’s theory on thought and decision making?

Answer 14

system 1 jumps to conclusions, is overconfident and is susceptible to framing effects

Question 15

How do emotion and affect heuristics affect decision making?

Answer 15

likes and dislikes determine beliefs, impaired affect is associated with impaired decision making

Question 16

What is the focusing illusion?

Answer 16

things seem to be far more important than they are when you are thinking about them

Question 17

What factors affect peoples rating of experienced well being?

Answer 17

ill-health, religion, children, wealth, education

Question 18

How does education affect EWB?

Answer 18

increases overall life evaluation but decreases experienced well-being due to stressful experiences

Question 19

What is anchoring and adjustment?

Answer 19

people become anchored to initial numbers even if they are completely irrelevant

Question 20

What did Northcraft and Neale find in relation to anchoring?

Answer 20

that estate agents can produce an anchoring effect of 40%

Question 21

What is the availability heuristic?

Answer 21

frequencies or probabilities are estimated by the ease with which instances or associations are brought to mind

Question 22

What are the 3 heuristics for judgements found by Kahneman and Tversky?

Answer 22

availability
representativeness
anchoring and adjustment

Question 23

What is representativeness?

Answer 23

it is based on a fundamental cognitive process of looking for similarity to a stereotypical/common member of that type

Question 24

What are the problems with employing representativeness?

Answer 24

it ignores base rates
can use poor information
conjunction fallacy

Question 25

What factors can create an illusion of understanding?

Answer 25

hindsight bias
outcome bias
illusion of validity

Question 26

What is the hindsight bias?

Answer 26

when you know something has happened you believe that before it happened it would have been much more likely to happen that it really was

Question 27

What is the outcome bias?

Answer 27

when you know the outcome of something you fail to consider other possible outcomes

Question 28

What is the illusion of validity?

Answer 28

confidence reflects the ease of decision making not the accuracy of the decision

Question 29

What is regression to the mean?

Answer 29

scores will naturally regress to the mean value so it may appear there is a causal effect when there is not

Question 30

What is an inside view?

Answer 30

how you think something will happen often leads to planning fallacy and irrational perseverance

Question 31

What is an outside view?

Answer 31

with previous experience you know roughly how something will happen

Question 32

What is subjective-expected utility theory?

Answer 32

you should make choices that have the highest subjective value to you

Question 33

What is a homo economicus?

Answer 33

someone who employ utility theory

Question 34

What is Prospect Theory developed by Kahneman and Tversky?

Answer 34

outcomes should be defined in terms of gains and losses from the status quo and not in terms of total amounts

Question 35

What is the function of people’s loss and gain?

Answer 35

inflexion graph; people are far more averse to losing a certain amount than they are tempted to gain that amount

Question 36

What is the certainty effect?

Answer 36

people are more risk aversive when it comes to high probability gains but more risk seeking when it comes to high probability losses

Question 37

What is the possibility effect?

Answer 37

people are more risk seeking when it comes to low probability gains but more risk averse when it comes to low probability losses

Question 38

What is a problem with utility theory?

Answer 38

it says that a 5% increase should be the same at all levels (e.g. at 10% or 90%) when in fact these changes are psychologically different

Question 39

What is the Endowment effect?

Answer 39

ownership seems to create an irrational relationship with objects; willingness to pay is not equal to willingness to accept

Question 40

What is the Allais Paradox?

Answer 40

what people actually do does not correspond to what utility theory states

Question 41

What is sunk cost fallacy?

Answer 41

people are more likely to do something if they have already invested money into it

Question 42

Do people consider the actual amount of money saved or the proportion when considering buying something?

Answer 42

the proportion of money; the gains are more easily reasoned

Question 43

What is a framing effect?

Answer 43

the way a question is presented changes the answer people will give based on the focus of with gains or losses