Topic 8: Decision Making

Question 1

problem of decision making

Answer 1

what to choose out of all the options available

Question 2

importance of decision making

Answer 2

our choices define who we are and how we interact with the world

Question 3

challenge of decision making

Answer 3

what are our options? what are the outcomes and how likely are they? what do we value?

Question 4

Expected Value (EV)

Answer 4

• average outcome if a scenario is repeated many time

- calculated using probabilities and values of possible outcomes

Question 5

how to calculate expected value

Answer 5

multiplying the probability of each outcome by its associated award ((% x $__)+ (% x $___))

Question 6

advantages for using expected value (3)

Answer 6

• clear prescription for “correct” choices
• leads people, on average, to maximize monetary gains given what they know about the world
• keeps people decisions internally consistent

Question 7

two problems with using expected value

Answer 7

• difficult to apply for non-monetary decisions

- doesn’t explain actual choices by actual people

Question 8

Prospect Theory

Answer 8

• people do NOT make decisions based on expected values, probabilities, and absolute outcomes; they make them on subjective utility, decision weights, and relative outcomes
• quantitative decision making model saying that people make decisions based anticipated gains and loses from their current state, and that probabilities are subjective

Question 9

utility

Answer 9

psychological value; usefulness or desirability of an outcome; total satisfaction

Question 10

expected utility

Answer 10

the personal value placed on the potential outcome of a decision as weighted by the relative probability soft those outcomes; summarizing the utility under a given circumstance

Question 11

rationality

Answer 11

consistency in decision making that is based on a conscious evaluation of the circumstance

Question 12

reference dependence

Answer 12

a core assumption of prospect theory, such that outcomes are evaluated in terms of their relative change (+/-) from the current state

Question 13

probability weighting

Answer 13

core assumption in prospect theory, such that the subjective probability of an outcome can differ systematically from the objective probability

Question 14

behavioural economics

Answer 14

new social science discipline that combines elements of traditional economics and psychology to explain real-world decisions, including observed basis in choice

Question 15

in a coin flip where you either win or lose the money, the expected utility will always be

Answer 15

0

Question 16

the phenomenon where $0 and $1000 has a greater utility than $100 000 and $101 000

Answer 16

diminishing marginal utility

Question 17

diminishing marginal utility has a ______ function

Answer 17

concave

Question 18

rational thinking tends to be free of ______

Answer 18

cognitive limitations and whim

Question 19

T/F: rational choice models accurately describe real-world decision making processes

Answer 19

false

Question 20

prospect theory attempts to predict what people ____ (will/should) choice

Answer 20

will

Question 21

two major differences between prospect theory and expected utility theory

Answer 21

1) prospect theory assumes reference dependence (comparisons to current state)
2) prospect theory proposes probability weighting (overestimate low-probabilty events and underestimate high-probabiltiy events)

Question 22

people want to seek gains ____ than they want to avoid losses

Answer 22

less

Question 23

diminishing marginal utility

Answer 23

subjective utility increases more slowly than object values, especially at large values

Question 24

loss aversion

Answer 24

utility function is steeper for losses than gains

Question 25

what happens when you change the way a question is asked to create a different point of reference

Answer 25

it leads to different valuations and thus difference choices

Question 26

primary/unconditioned reinforcers

Answer 26

stimulus whose reward properties come from its salutary effects on homeostatic processes; food, water, warmth, and sex

Question 27

secondary reinforcer

Answer 27

no direct effects on homeostatic processes but is still rewarding; money

Question 28

negative reinforcement

Answer 28

withdrawal of desirable stimulus

Question 29

punishment

Answer 29

delivery of an aversive stimulus

Question 30

two common effects of insufficient dopamine systems

Answer 30

• difficulty controlling movements (Parkinsons and Huntington’s)
• linked to psychiatric disorders (schizophrenia, depression, and ADHD)

Question 31

two important structures in the midbrain for dopamine neurons

Answer 31

• substantia nigra

- ventral tegmental area or VTA

Question 32

substantia nigra’s importance

Answer 32

motor control through basal ganglia connections to striatum and thalamus

Question 33

importance of ventral tegmental area (VTA)

Answer 33

• reward evaluation through uncles accumbens in basal ganglia, amygdala, hippocampus, and medial frontal lobe
• part of the midbrain with dopamine neurons for reward and learning
• motivation

Question 34

nucleus accumbens

Answer 34

subdivision of the ventral striatum that contains neurons sensitive to dopamine and contribute to learning an reward evaluation

Question 35

most drugs of abuse (except psychedelic compounds like LSD) use alterations in _______________ to exert addictive influences

Answer 35

function of dopamine neurons

Question 36

what is the old idea about dopamine and rewards, and why is it not entirely true?

Answer 36

• Old idea: midbrain dopamine signals pleasure/reward

- dopamine signals motivations to pursue a reward/seeking, not it is not linked with ‘liking’ something

Question 37

What gave Shultz, Dayan, and Montague the idea that learning was driven by rewards?

Answer 37

single unit recording form monkey’s midbrain dopamine neurons in VTA

Question 38

Three conditions from Schultz et al’s study showing that learning is driven by rewards

Answer 38

1) before learning: monkey touches lever after appearance of light to receive drops of juice (dopamine neurons activated after the delivery of reward)
2) after several days of training: animal learns to reach for lever as soon as light is presented (primary reward doesn’t elicit dopamine response, the light does)
3) reward not delivered: if the monkey doesn’t receive reward at expected time; dopamine neurons increase firing for short period of time, so activity is lower than baseline

Question 39

conclusions found my Shultz’s study

Answer 39

• activity of midbrain dopamine neurons is related to reward
• dopamine neurons don’t strictly report occurrence of reward
• dopamine neurons code deviations from predictions about time and magnitude of reward

Question 40

reward prediction equation and the three outcomes

Answer 40

actual reward - expected reward

a) RPE > 0; better than expected
b) RPE = 0, as expected
c) RPE < 0; worse than expected

Question 41

orbital frontal patients

Answer 41

• perform normally on IQ tests
• perform normally on cognitive control tests
• seem to make poor life decisions

Question 42

damage to orbitofrontal cortex leads……

Answer 42

• impairments in learning the relationship between stimuli and rewards
• expected emotions aren’t generated, and overemphasized immediate reward over long term outcomes (temporal discounting)