Week 3 - Fallacies and Heuristics Flashcards
Law of Large Numbers
Outcomes become closer to the expected value with more trials
Gambler’s fallacy
If a particular event occurs more frequently than normal during the past, it is less likely to happen in the future, even when events are statistically independent
Regression effect
Regression to the mean. Extreme effects will, on average, be less extreme at another point in time
Effect applies to stable context
In unstable context, extreme observation can be indicative of change
Anchoring
People give too much weight to the first bit of data for their quanitative estimates
Lexical Decision Task
Task to measure cognitive accessibility
Existing word –> “yes” button (as fast as possible)
Non-existing word –> “no” button (as fast as possible)
More accessible words are recognised more quickly as being existing words
Availiability Heuristics
Mental shortcut that relies on immediate examples that come to a given person’s mind
People who watched the film Jaws were more likely to overestimate the number of shark deaths per year than people who had watched another film
Often leads to good estimates but familiarity and vividness of information can bias estimates
* Number of people who are members of a student club in Leiden is overestimated. Just as shark attacks or lightning deaths.
Simulation heuristic
The generation (mental simulation) of events
* guides expectations, motivation, behavior
Particularly present with missed opportunities
Counterfactual thinking
* Simulation of alternative results (“if only I had…”)
* The easier it is –> the greater the dissapointment
1st place and 3rd place are happiest. The 2nd place is the ‘gold loser’ = experience the ‘what if’ question.
Representativeness Heuristic
The more characteristic A shares with B, the more likely people think that A and B are associated
Base rates
The percentage of a population that demonstrates some characteristic
- Can lead to accurate judgements
- Can lead to biases, e.g. if initial probabilities are ignored (base-rate fallacy)
Initial probability is much greater that a man works in the construction industry than in a library
Conjunction fallacy
Probability of co-occuring events is estimated to be greater than the probability of the seperate events
The probability that Joris is a librarian for the philosophy collection is objectively smaller than the probability that he works in a library, but this is often estimated to be greater
Dilution effect
Bias in which people underutilize diagnostic information (knowledge to make a particular judgement) when nondiagnostic information (irrelevant knowledge to the judgement being made) is also present
Information:
* 35 years old
* Man
* Unmarried
* Unemployed
* Drinks alone
* Gets drunk at parties
He’s an alcoholic (quite sure)
VS
Information
* 35 years old
* Lawyer
* Unmarried
* Listens to classical music
* Unemployed
* Drives a red Toyota
* Drinks alone
* Reads “The Economist”
* Gets drunk at parties
Perhaps an alcoholic (not so sure….)
Decoy effect
Popcorn effect
Consumers change preference due to a dominated alternative
Options: small, medium, large
Small dominates Medium in terms of price
Large dominates Medium in volume, and relative price
Medium seems like best option
