Week Seven

Question 1

Choice

Answer 1

A selection made between two or more alternatives

Question 2

Bounded Rationality

Answer 2

Limitations or constraints in the reasoning process of the decision maker

Question 3

Optimizing

Answer 3

• Evaluate all the available choices
• Select the choice that will result in the most favorable outcome

Question 4

Satisficing

Answer 4

• Set an aspiration criterion level
• Search all possible choices until a choice is found that satisfies the aspiration criterion
• Select this alternative and stop search

Question 5

Is having too many choices detrimental?

Answer 5

• People prefer having extensive choices over limited choices
• People’s motivation to act on their choices is lower when there are extensive choices

Question 6

Choice overload effect

Answer 6

“The provision of extensive choices may sometimes still be seen as initially desirable, it may also prove unexpectedly demotivating in the end”

Question 7

When are people susceptible to the choice overload effect?

Answer 7

• When people are not familiar with the options
• When people do not have a preference for any of the choices

Question 8

Are there individuals differences in how people make decisions? If so, what factors determine whether people maximize?

Answer 8

YES!
Three factors:
- Being open to better alternatives
- Having high standards
- Being uncertain about the optimal outcome