Week 3

Question 1

What is a heuristic?

Answer 1

Use of mental shortcuts to quickly form judgements, make decisions & find solutions to complex problems –> uses a subset of info set.

Question 2

What is the conjunction fallacy?

Answer 2

• Inference that a conjoint set of 2 or more specific conclusions is likelier than any single member of that same set.
• Violates laws of probability that probability of 2 events occurring together is always less than or equal to probability of either one occurring itself.
• Variant of representativeness.

Question 3

What is gambler’s fallacy?

Answer 3

• Incorrect belief that if a particular event occurs more frequently than normal during the past, it is less likely to happen in future (although they are independent events).
• Variant of representativeness.

Question 4

What is the conservatism/anchoring heuristic?

Answer 4

• People make estimates from diff. starting points –> yield diff. estimates, which are biased toward initial values due to insufficient adjustments/extrapolations.
• May also occur when basing estimates on result of some incomplete computations.
• Insufficient & slow adjustments to beliefs in face of new info –> underreaction –> compared to Bayesian updating, people update their posteriors in right direction but by too little in magnitude (underestimate probabilities).

Question 5

What is base rate neglect?

Answer 5

• Subjects neglect base rate (or prior probability) which should have major effect on estimation of probability.
• Variant of representativeness.

Question 6

What is the representativeness heuristic?

Answer 6

• Probabilities are evaluated by degree to which A is representative of B.
• When A is highly representative of B, probability that A originates from B is judged to be high –> but if A not similar to B, probability that A originates from B is judged to be low.
• However A being more representative does not actually make it more likely –> probabilities overestimated according to Bayes’ rule –> i.e. leads to overreaction to info.

Question 7

What are the 2 types of decision heuristics?

Answer 7

1) Representativeness.
2) Conservatism.

Question 8

What are the 3 variants of representativeness?

Answer 8

1) Conjunction fallacy.
2) Base rate neglect.
3) Gambler’s fallacy.