week 2 - decision making Flashcards
What is decision making?
Decision making is the set of cognitive processes where people choose an action from a set of different possible alternatives.
What is preference-based decision making?
Preference-based decision making is where some decisions are made on the basis of preferences over the consequences of different possible actions.
What is perceptual decision making?
Perceptual decision making involves choosing between competing interpretations of noisy or ambiguous sensory information.
What is expected utility theory (EUT)?
Expected utility theory is an economic theory that describes how people make decisions under uncertainty, proposing that people behave in a way that maximizes their expected utility.
What are the components of expected utility theory?
The components of expected utility theory include acts, consequences, states, and utility.
What are acts in expected utility theory?
Acts are the different actions that a decision maker can take.
What are consequences in expected utility theory?
Consequences are the different possible results of an act, categorized as pleasant, unpleasant, or neutral.
What are states in expected utility theory?
States are all the factors that are out of the decision maker’s control, which may determine which consequences follow an act.
How is utility defined in expected utility theory?
Utility is defined as the degree to which a given consequence helps an individual achieve their goals.
What does positive utility mean?
Consequences that move us closer to achieving our goals have positive utility.
What does negative utility mean?
Things that move us away from achieving our goals have negative utility.
What does ‘expected’ mean in expected utility theory?
‘Expected’ means that we consider the probability of each consequence when calculating how much utility we expect to get from a particular decision.
What is rationality in expected utility theory?
In expected utility theory, rationality is defined as making decisions that maximize expected utility.
What is risk aversion?
Risk aversion is a preference for relatively certain outcomes over relatively uncertain outcomes.
What does prospect theory explain?
Prospect theory explains how we make decisions under risk and uncertainty, including risk aversion, loss aversion, the endowment effect, the framing effect, and the default-option bias.
What is loss aversion?
Loss aversion is the tendency to prefer avoiding losses more strongly than acquiring similar sized gains.
What is the endowment effect?
The endowment effect is when people tend to over-value things that they already own and undervalue things that they do not own.
What is the framing effect?
The framing effect occurs when people make different decisions in the exact same situation depending on whether the scenario emphasizes potential gains or potential losses.
What is the default option bias?
The default option bias is when people tend to choose a default option over other options, even if the default option is not a good one.
How do emotions influence decision making?
Emotional states influence the decisions we make, particularly in interpersonal and risky decision making.
What is the affect heuristic?
The affect heuristic is a person’s tendency to make decisions based on their emotional reactions to different potential consequences.
What is the somatic marker hypothesis?
The somatic marker hypothesis states that for complex decisions, people rely on emotional signals generated from their bodies.
What is the Affect Infusion Model?
The Affect Infusion Model proposes that emotions information is incorporated into the appraisal of actions and consequences.
What is the Mood Maintenance Hypothesis?
The Mood Maintenance Hypothesis suggests that people in pleasant moods want to maintain their mood, while those in unpleasant moods want to improve their mood.
