Treatment Decision Making Flashcards
What is the maximum expected utility?
Maximum expected utility is the greatest expected utility. The correct and most rational choice.
What is the Classical Decision Theory as theorised by von Neumann and Morgensten? Expected utility theory.
It is a normative theory how people should make their decisions. Based on probability. A structure linking the choice made with peoples value towards the outcomes of options and the probably of these outcomes occurring.
What are the six rules to probability theory (axioms)?
Ordering - one option over another
Transitivity- If A beats B, B beats C, A beats C
Invariance - presentation of an option should not affect preference
Continuity- individual shouldn’t compromise, should choose best
Cancellation- both actions have same consequence, shouldn’t affect decision.
Dominance- never choose an option with a dominated attribute.
As individuals can’t calculate the EUT, Bounded Rationality (by Simon) is used. What are the processes?
- Satisficing (by Simon) choosing 1 desired criterion, then comparing options for this criterion.
- Elimination by aspects (by Tversky) choose one aspect and trade off extra aspects.
There are two information processing strategies, what is System 1?
System 1 is fast and intuitive, choice made on small piece of information. Sub conscious, little effort but may lead to regretting choices.
There are two information processing strategies, what is System 2?
System 2 is slow and analytic, it is conscious and time consuming and is less likely to lead to regret.