Judgement

Question 1

define thinking acc to the APA definition

Answer 1

APA definition → cognitive behaviour in which ideas, images, mental representations or other hypothetical elements of thoughts are experienced or manipulated. It is covert and symbolic

Question 2

who theorized the 2 different ways of thinking model?

what are the 2 ways called?

Answer 2

Daniel Kahneman
System 1 & System 2

Question 3

System 1

Answer 3

quick, effortless
–> lack of control
–> ideal for quick, non-important decisions
–> often falls prey to bias and heuristics

Question 4

System 2

Answer 4

Slow, deliberate, controlled and effortful

Question 5

when are decisions fully optimal? does this usually happen?

Answer 5

when we have all the necessary knowledge
–> almost never happens
–> we’re typically functioning under a certain degree of uncertainty

Question 6

do the systems work together or against each other?

Answer 6

complement each other generally but depends on the situation

Question 7

what 2 types of behaviour do we typically engage in?

Answer 7

• rational = objective and logical
• irrational = subjective and biased

*THO BOTH ARE OPEN TO BIAS

Question 8

what is a good thing about our irrational behaviour tho?

Answer 8

we are predictably irrational, our errors are systematic and consistent
–> we can therefore empirically understand ourselves

Question 9

which type of thinking tends to be more reliable?

Answer 9

slow thinking
–> still open to errors
–> and often we are literally unable to think slowly due to external factors

Question 10

what are heuristics

Answer 10

mental shortcuts, part of quick thinking (S1)
–> allow us to make decisions quickly and efficiently but very prone to error, biases and irrelevant info

Question 11

are heuristics generally bad?

Answer 11

no, they’re very beneficial and not entirely irrational
–> in fact, in many situations, they’re better than more rational models
–> especially bc these are often not practical for everyday life
–> you just have to be super aware that they can fall strongly into a propensity of errors

Question 12

name the 7 main types of heuristics

Answer 12

1. representativeness
2. conjunction fallacy
3. sample size and misconceptions of chance
4. availability
5. anchoring and adjustement
6. recognition
7. cue-based heuristics

Question 13

representativeness

Answer 13

= The likelihood of an event is estimated based on how closely it matches or represented related examples or stereotypes, ignoring prior possibilities

–> probability judgements are influenced by similarities to a preconception

Question 14

what do we ignore due to the representativeness heuristic?

Answer 14

base rate frequencies / prior probabilities

Question 15

what is one example of the representativeness heuristic?

Answer 15

Steve, a quiet meek person who is always helpful, we tend to assume that he would be a librarian rather than a farmer
–> And yet we all recognize that there are more farmers than librarians, so statistically, he would be more likely to be a farmer

Question 16

Conjunction fallacy

Answer 16

= The false assumption that a combination of conditions is more likely than either
condition by itself

Question 17

what is one example of the conjunction fallacy?

Answer 17

Linda is a bank teller vs Linda is a feminist bank teller

Question 18

law of sample size

Answer 18

smaller sample sizes produce more variance

–> and yet when making predictions between larger and smaller samples we ignore this

Question 19

misconceptions of chance

Answer 19

we expect a series of events to look random
–> H-H-H-T-H-T-T seems more probable than H-H-H-H-T-T-T-T
–> but both are equally likely

Question 20

gambler’s fallacy

Answer 20

faulty reasoning that past events in a sequence will affect the likelihood of future events

Question 21

hot hand effect

Answer 21

perception of being in a roll

–> People seek patterns where there are none, leading to biased illusions that someone is more likely to do better bc they previously did better

Question 22

availability

Answer 22

= Shows that people estimate the frequency of an event based on how easily examples
come into mind

Question 23

why do we have the availability heuristic?

Answer 23

USUALLY the ease of thinking of examples is a useful cue for judging the frequency or probability of an event

–> but in situations of danger, other factors like media coverage enhance the salience

Question 24

what is an example of the availability heuristic?

Answer 24

we’re more scared of less common but more salient dangers (shark attacks) and less scared of more common but less salient dangers (skin cancer)

–> when asked whether words beginning with r or having r as its third letter are more common, we tend to say that the first are more common

Question 25

anchoring and adjustment

Answer 25

= Shows how different starting points ie initial values produce different estimates or decisions

Question 26

why do anchoring and adjustment biases happen?

Answer 26

we estimate value relative to other options, and don't have a strong absolute sense of value or price

Question 27

what is an example of the anchoring and adjustment bias?

Answer 27

If we ask people to estimate the product of 8x7x6x…x1 we get a higher estimate than when we ask people to estimate the product of 1x2x3…x8 despite them having the same answer

Question 28

decoy effect

Answer 28

the introduction of a more or less expensive item provides an anchor to stimulate the sales of the target item --> using the anchoring bias in marketing

Question 29

recognition

Answer 29

= Placing higher value on an alternative that is recognized vs novel

Question 30

what effect is implied in the recognition bias?

Answer 30

mere exposure effect --> bad press is better than nonewha

Question 31

what is an example of the recognition bias?

Answer 31

Predicting the success of professional tennis players based on name recognition rather than based on rankings

Question 32

what other type of heuristic is the recognition bias similar to?

Answer 32

fluency heuristic = assigning higher value to an option that is recognized more quickly

Question 33

cue-based heuristic

Answer 33

Important for decisions that require consideration of multiple cues of features, such as selecting a new cell phone

Question 34

2 types of cue heuristics

Answer 34

- one-clever-cue heuristic - take-the-best-cue heuristic

Question 35

one clever cue heuristic

Answer 35

uses a single cue to make a decision

Question 36

take the best cue heuristic

Answer 36

consider each cue in turn, sequentially, and systematically select which are more important for you

Question 37

what tool can we use when faced with a lot of cues?

Answer 37

fast and frugal search trees --> using a limited set of yes/no questions rather than a larger set of probabilistic ones to choose

Question 38

what is tallying

Answer 38

a type of heuristic that simply involves counting the number of cues that favor one alternative over another Does NOT involve weighting cues acc to their importance -> for predicting avalanches, simply tallying whether 3 out of 7 cues are present

Question 39

what is the zero price effect

Answer 39

the enticement of a free option or item --> offering free shipping if you buy 2 books instead of 1 --> genuinely more expensive but seems smarter

Question 40

what is decision makingt

Answer 40

the process of selecting one option or a course of action from one or more alternatives

Question 41

how do we generally make choices?

Answer 41

to maximize utility = the satisfaction that we receive from obtaining an option --> maximize positive utility, minimize negative utility

Question 42

how do psychs measure decision making in the lab?

Answer 42

gambling tasks

Question 43

what is the formula to determine the better option rationally

Answer 43

calculate expected value = value x probability

Question 44

rational choice thoery

Answer 44

the best possible decisions are made by calculating the expected value of all presented options

Question 45

but why do we deviate from rationality??

Answer 45

1. options are ambigious 2. value or utility is subjective so its prone to bias

Question 46

normative theories

Answer 46

Based on rational, logical and mathematical calculations to compare decision options → how decisions should be made

Question 47

descriptive theories

Answer 47

how we actually decide, describing beliefs and preferences as they are, not as they should be

Question 48

what is one bias that drives decision

Answer 48

loss aversion = people hate losses more than they enjoy equivalent gains --> tend to prefer sure gains over risky ones

Question 49

prospect theory

Answer 49

=people treat the same dollar loss as psychologically larger than the same dollar gain --> graph has a asymmetrical s curve

Question 50

when evaluating gains how do people behave? does this ever change?

Answer 50

risk aversive --> when faced with a sure loss, people become risk seeking

Question 51

what re 2 other factors that contribute to irrational decisions?

Answer 51

framing status quo effect

Question 52

framing

Answer 52

Decisions depend on how the problem is framed. For example on whether something is presented as a potential gain OR as a potential avoidance of a loss --> works as a perceptual illusion --> can encourage either pos or neg behaviour --> causes us to put too much weight on low probability events like winning the lottery

Question 53

when is our perception of probability different, according to the framing effect?

Answer 53

near the boundaries or impossibility (0%) or certainty (100%)

Question 54

status quo

Answer 54

people prefer to maintain the status quo we have a preference for the current state of affairs

Question 55

why do we have the status quo bias?

Answer 55

because change, or even considering a change requires time, effort and money --> transaction cost - we can even explain this preference through the lens of loss aversion

Question 56

is the status quo positive or negative?

Answer 56

both, in a way --> people tend to accept the option given to them first --> so if we develop policy making sure that the first choice given to them is good, then we can harness the power of this bias

Question 57

what is the endowment effect?

Answer 57

tendency to overvalue what one already has in hand --> type of status quo effect

Question 58

sunk cost effect

Answer 58

also called Concorde fallacy = the tendency to irrationally continue investing in a project, decision, or activity because of previous investments, even when it no longer makes sense to do so

Question 59

does slow thinking always guarantee sound choices?

Answer 59

nope - attention is limited - info overload may lead to poorer decisis - sometimes we can use unconsiocus thought to make better decisions that involve multiple factors

Question 60

deliberation without attention effect

Answer 60

you have consciously made a decision, but unconscious processes helped you reach it (ie, sleeping on it) --> making decisions through this can often lead to better decisions and more happiness after the fact of choosing, since you didn't spend that much time consciously considering the other option that you ultimately forego --> this doesn't mean that you should distract yourself when making important decisions, just that taking a break and sleeping on it might be a good idea