1
Q
What is the difference between judgment and decision making ?
A
- you use judgment to make a decision
- it is basically the process (heuristic)
2
Q
What is the natural frequency hypothesis ?
A
- based on evo. we find it easier to work with frequencies then with percentages regarding decision making
3
Q
Name the 4 phases of how decisions are made:
A
- Setting goal
- Gathering information
- Decision structuring (organize options)
- making a final choice
- evaluation
4
Q
What are cognitives illusions ?
A
- Basicall in everyday life ur cognitions are not allways correct but they are still usefull
- it is the consequence of heuristics
5
Q
What is the base rate fallacy ?
A
- to over estimate the rare feature or underestimate the common feature
6
Q
What is the availability heuristic ? (also name on failure)
A
- is a mental shortcut that relies on immediate examples that come to a given person’s mind when evaluating a specific decision
- basically the first thought
- work with the fluency mechanism
- failure to include base rate
7
Q
What is the fluency mechanism ?
A
- recalling instead of retrieving memory
8
Q
Why is the availability heuristic not so good ?
A
- Because it leaves out the base rate information
9
Q
What is the representativeness Heuristic ?
A
- deciding on something because it is more represented in current time
10
Q
What are the problems with the representativeness Heuristic ?
A
- more representative is not equal more likly
- conjunction fallacy
- also leaves out base rate info
- gambers fallacy
11
Q
What does conjunction fallacy mean ?
A
- the mistaken belief that the probability of a conjunction of two events (A and B) is greater than the probability of one of them (just A)
12
Q
What is a common problem with all heuristics ?
A
- the mistaken belief in the law of small sample numbers
13
Q
What is the framing effect ?
A
- the influence of irrelevant aspects of a situation (e.g., wording or cotext )on decision making.
- it depence on individual differences
- also depent on loss aversion (loses are more seriously then gains)
14
Q
What does anchoring mean regarding decision making ?
A
- rely to much on a key argument and only create sub arguments supporting the main argument while leaving out other important informations
15
Q
What is the sunk cost effect ?
A
- Greater tendency to continue something once one has invested in it (via money)
- not common on childreen and animals
16
Q
What is the hindsight bias ?
A
- thinking that events were more predictable after the event took place
17
Q
What is conformation bias ?
A
- So only gather information about supporting your first theory
- Instead of finding contradiction argumentation
18
Q
What is the overconfidence on decision making ?
A
- thinking that u can deal with everything and that u know everything (arrogant way)
19
Q
What is the omission bias ?
A
- Tendency to prefer inaction to action when engaged in risky decision making
- the opposite of action based bias
- regret is greater when unwanted outcome is caused by action
20
Q
What is the support theory ? (Name two characteristics)
A
- a more explicit description of an event is regarded as having greater subjective probability
- Example: How likely do u die next summer vacation -> less likely the n when u would add information
1. more attention to given aspects
2. limitation of memory -> memory only gets activated when explicitly stated
21
Q
What are some everyday life problems regarding decision making ?
A
- misunderstanding of problems
- priming via media
- most explanation research were proofed in artificial stteings
- everyone solve problems individually
- process of heuristic is not really known
22
Q
How do we choose the correct heuristics ?
A
- take the best ignore the rest
- mostly fav is the recognition heuristics
23
Q
What is the recognition heuristics ?
A
- using the knowledge that only one out of two objects is recognized to make a judgement
- take the one u know
24
Q
What are the problems with recognition heuristics ?
A
- is it not as obvious as it seems to take the better choice
25
What is the utility theory ?
- ita about trying to maximize the outcome in every decision
- it is very rational
- Economic theory
26
How do we calculate the utility theory ?
- Expected utility = probability of a given outcome × utility (nützlichkeit) of the outcome
27
What are the problems with the utility theory ?
- to rational not explain real behavior and do not take emotions into account
28
What is the multi attribute utility theory about ?
1. Identify attributes relevant to the decision.
2. Decide how to weight those attributes.
3. Obtain a total utility (subjective desirability for each option by summing its weighted attribute values).
4. Select the option with the highest weighted total
- Example flat renting decision
29
What are the limitations to the multi utility theory ?
- Elimination by aspects
- > decision makers have too much info to deal with they don’t take all dimensions into account but rather select one factor
30
What is the prospect theory ?
- Economic theory by kahneman
- tries to understand actual decision making behavior while including risk taking behavior
- competend to utility theory
31
What is loss aversion ?
- Individuals are much more sensitive to potential losses than to potential gains
32
What is the dominance principle and witch of the two major theory does it support ?
- in decision making, the notion /vorstellung that the better of two similar options will be preferred -> only for utility
33
What are some limitations on the prospect theory ?
- does also not focus on the individual lvl
- self esteem not included
- > work on that ask leo !!!
34
How do we take decisons for others ? ?
- higher risk tking bahevior
- seek more info
- gives us the feeling of power
35
What is nudging ?
- steer people in a particular direction while still allowing them to go their own way
36
When are nudges ineffective ?
- behavior is not understanded
- when info are to confusing
- When people show rejection
- only short term effect
37
What are the 3 responses to failure of nudging ?
1. Do nothing
2. nudge better
3. More aggressive approach with the nudge
38
What is unbound rationality ?
- assumes that all relevant info. are available for use
- so using optimization !(choosing the best option)
- Limitation amount of time also limited process ability
39
What is bounded rationality ?
- because of our process limitation we tend to use heuristics
- heuristic satisfiction = individuals consider various options one at a time and select the first one meeting their minimum requirements.
40
What is the unconscious thought theory ?
- it could be that complex decisions are made by the unconsciousness because they have greater capacity
41
What are the 3 models regarding decison making ?
1. normative
2. perspective
3. descriptive
42
What is meant normative model ?
- define ideal performance under ideal circumstances
| - Example expected utility
43
What is the perspective model ?
- show how we should make a decision
44
What is the descriptive model ?
- simply detail what people actually do when they make decisions
- > example: prospect theory
45
What is the endowment effect ?
- The tendency for owners (potential sellers) to value objects more than potential buyers
46
What are the 3 influences of endowment effect ?
- loss of aversion (losses hurt more then winning)
- mere ownership (besitztum is mehr wert weil er deins ist)
- having certain type of underlying mechanism of construals (independent vs interdependent)
47
What are the underlying mechanism of construals ?
- independent self construal = more positive regard for the self -> self enhancement -> western-> less value of the selling object
- interdependent self construal = less positive regard for the self -> self criticism -> japenese -> higher value of selling object
48
What is the image theory regarding problem solving ?
- not based on rationality
- follows 3 dimensions
1. Value image (morals)
2. trajectory image (future impact)
3. strategic image (does it fit the purpose an overall goal )
- > If all dimensions are past then the decision is clear
49
What is important to mention regarding western world and the Japanese?
-> interdependent and independent construals are not generlizabel
50
Why do we use heuristics ?
- We use heuristics even though they can cause errors because they are easier to process (lower cognitive load)
51
What is meant by the gambers fallacy ?
- the common beliive that when something is over representative in current time that it will be under representative in the future
52
What are supporting theory regarding the support theory ?
- The availability heuristic
53
Name the three steps regarding the recognition heuristic ?
- Search rule: Search for a discriminatory cue
- stopping rule: stop after finding cue
- Decision rule
54
What are two characteristics of the multi attribute utility ?
- best model for achieving all their goals
- very rational
- very complex
55
Name two charcteristics regarding the prospect theory !
- emotions and mood
- use of heuristics
- very individual
56
What is the elimnation by aspect theory ?
- decision makers eliminate options by considering one relevant attribute or aspect after another.
