Week 3

Question 1

What are heuristics?

Answer 1

Mental shortcuts people use to make decisions quickly and efficiently
- It can lead to suboptimal choices when judged by idealized standards of rationality

Question 2

Tversky and Kahneman say that there are 2 interacting systems in cognition - what are they

Answer 2

System 1 - Intuitive system - fast/automatic
System 2 - Conscious reasoning - slow, improved by learning

Question 3

Name an example of both systems

Answer 3

System 1 - Crossing a road
System 2 - Taking derivatives

Question 4

Iyengar and Lepper (2000) - Jam experiment

Answer 4

Consumers initially exposed to limited choices proved considerably more likely to buy the product than consumers who had initially encountered a much larger set of options
Choice overload
- Large choice sets are ‘demotivating’
- No obvious dominant option
- Complicated alternatives - thus ‘opt out’ of making a choice altogether

Question 5

Tversky and Shafir (1992)

Answer 5

• Filled out a questionnaire - paid $1.50 in either money or a pen
• More people initially chose the pen
• But when introducing different coloured pens, more people chose money

Question 6

Vohs et al (2008) - Ice water test

Answer 6

• Making many decisions impairs subsequent self-regulation
• Consistent with the hypothesis that both choosing and self-control depend on a common but limited resource

Question 7

Frederick (2005) - Cognitive reflection test

Answer 7

Designed to measure the tendency to override a dominant response alternative that’s incorrect and to engage in further reflection that leads to the correct response
- Many people show a characteristic, common to many reasoning errors:
- Give the first response that comes to mind without thinking further and realizing this can’t be right

Question 8

Biases definition

Answer 8

Describes our tendency to think in certain ways

Question 9

What are the 3 heuristics

Answer 9

• Availability (when an unlikely event comes to mind, we overestimate its occurrence - like winning the lottery)
• Representativeness (estimating the likelihood of an event by comparing it to an existing prototype)
• Anchoring and adjustment (used when people have to estimate a number)

Question 10

2 reasons why people have difficulties in understanding probabilistic processes

Answer 10

• Biased media coverage
• Misleading personal experiences