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77 Cards in this Set
- Front
- Back
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Certainty
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a. Know exactly what could happen (pick this, that happens)
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Risk:
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(does not mean Danger) a. With known probability and known outcome
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Uncertainty
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Don't Know Outcome, Don't Know Probability
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Ignorance
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Never been here before, dont know how, dont know what it si
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Conflict
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someone is trying to exploit your ignorance
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Dominance Reaction
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Perceptual Denial ( either the black or the hear overrode what they saw and changed it in their minds to make it appear normal
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Compromise
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saw the card as purple or greyish
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Disruption
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rare but dramatic, (not sure what they even saw)
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Recognition
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could notice something was wrong
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Perceptual Organization
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powerfully determined by expectations build upon past commerce with the environment
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Potent Expectations
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- (given tonic water but think its vodka) people act certain ways because they have expectations
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Cognitive factors
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what people expect to see
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Motivational Factors
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what people want, hope, desire to see
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Selective Perception
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Dartmouth vs. Princeton Game (each side perceived the game differently and the opposite side being in the wrong position)
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Cognitive Dissonance
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people are usually motivated to reduce or avoid psychological inconsistencies
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• Self-Perception Theory
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1.) people discover their own attitudes, emotions, and other internal states partly by watching themselves behave in various situations 2.) to the extent that internal cues are weak, ambiguous, or uninterruptable, people are in much the same position as an outside observer when making these inferences
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Predecisional Dissonance
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dissonance or the prospect of dissonance influences the decisions people make
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Postdecisional Dissonance
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dissonance or the prospect of dissonance follows a choice that has already been made, and the avoidance or reduction of this dissonance has an effect on later behavior
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Festinger, L. & Carlsmith, J. M. (1959). Cognitive consequences of forced compliance.
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Study People were either given $1 or $20 dollars or nothing,"",,"",, $1 person-experienced Cognitive Dissonanceo They had to lie for no good reason, so they made themselves belief it was enjoyable
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Hindsight Biases
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“I knew it all along” o It is the tendency to view what has already happened as relatively inevitable and obvious-without realizing that in retrospective knowledge of the outcome is influencing one’s judgment.
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Loftus, E. F. (1975). Leading questions and the eyewitness report.
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Asked how fast a car was going, used different words: Smashed -Contacted, asked with different Ranges, Leading Question
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The Primacy Effect
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Words that appear first have a stronger effect then do words that appear later
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The Contrast Effect:
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o Ex2: objects appear to be smaller/larger depending on what is around them o Ex3:sports announcer seams small next to an NBA player and tall next to a jocky
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The Recency Effect
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• The effect that a presentation has on you, depending on when you give yours, if/when there is a break, when the other person goes, etc.
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Hershey, J.C., & Schoemaker, P.J.H. (1980). Risk taking and problem context in the domain of losses: An expected utility analysis.
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Insurance vs. Pure Gamble , EU , Social Norms Play a role
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Order Effects
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How people answer questions can be influences by the ordering of the question or response alternatives
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• Recency Effect: Schuman and Presser (1981)
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Most popular responses were the last choice
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Pseudo-Opinions
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o They will offer an opinion where they have no real opinions o Ex: Asking about the Metallic Metals Act ( no such thing)
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• Filtering out Pseudo-Opinons:
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Such as “no Opinion” or “don’t know”
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Inconsistency
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refers to a discrepancy between two related attitudes or attitude and corresponding behavior
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Plasticity:
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refers to a discrepancy in how people answer two versions of the same question
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Catch phrase
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points them into what they believe to be a socially desirable direction
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Framing as a Gain
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Risk Averse (A bird in the hand is worth two in the bush)
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Framing as a Loss
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Risk Seeking
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Deductive Logic:
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• Tax Deductions vs. Tax Premiums • Framing taxing of kids in a deduction and premium wording (even though same outcome)
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• Psychological Accounting:
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The Frame of Outcomes affect choices
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Tversky, A., & Kahneman, D. (1981) The framing of decisions and the psychology of choice.
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Different Choices for an Asian Disease , $10 Ticket and either lost the ticket or lost $10 dollars . Purchasing a Jacket and Calculator
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• Expected Utility Theory:
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o Normative Theory of Behavior Not to describe how people actually behave but how people would behave if they were rational which include:….
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o Ordering of Alternatives:
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Rational decision maker should be able to compare any 2 alternatives
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Dominance
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Rational decision maker should adapt dominate strategies, Weakly dominant-better in at least one respect and as good or better in the rest, Strongly dominant-superior in ever expect
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Cancellation:
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choice between 2 alternatives should only depend on how the outcomes differ, not how they are the same
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Transitivity:
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If you prefer A to B, B to C, you should prefer A to C
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Continuity
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: a decision maker should always prefer a gamble between the best and worst outcomes to a sure intermediate outcome if the odds of the best outcome are good enough (EV payoff is > sure thing.
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Invariance
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Not effected by the way a decision is presented
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• The Allais Paradox: Allais (1953)
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o People did not choose the choice with the higher EV Violated the Cancellation Principle
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• Ellsber’s Paradox: Ellsber(1961)
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o Urn containing balls, but then changed the worth of the balls o Violated the cancelation principle
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Intransitivity
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Prefer A to B, B to C, but C to A (Hiring a Committee member)
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Kahneman, D. & Tversky, A. (1982). The Psychology of Preferences.
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Gains o Concave Downward o Each extra dollar gained adds less value then the preceding one Losses o Convex o Steeper then Gain Means losses impact us more then Gains o Overweight Low Prob o Underweight High Prob
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• Satisficing:
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o EU is a normative model-(how people should act) o EU is not a very good descriptive model ( how people actually act
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• Prospect Theory:
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replaces utility with value,
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Utility
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defined only in terms of net wealth
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Value
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defines in terms of gains and losses(deviation from a reference point)
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---Endowment Effect
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when people have to sell their own stuff, they ask for more money, then they would pay for that very same item (Knetsch & Thaler 1990)
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• The Certainty Effect
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Difference between PT and EU A reduction of the prob of an outcome by a constant factor has more impact when the outcome was initially certain then when it was merely probable
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• Regret Theory:
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.)people experience the sensation we call regret and rejoicing 2.) making decisions under uncertainty they try to anticipate and take into account these sensations
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• Multi-Attribute Choice
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concerned with how not how well people make decisions
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Linear Model
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Each dimension is weighted according to importance Weighted dimensions are summed to make a total value
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o Additive Difference Model:
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First evaluated across alternatives and then only differences among alternatives are weighted and summed together Focuses on differences
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o Ideal Point model
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Decision maker has a representation of what an Ideal Alternative would be
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o Conjunctive Rule
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Eliminates any alternatives that fall outside certain predefined boundaries Ex(Fall out of GMAT scores & GPA)
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o Disjunctive Rule
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Each alternative is evaluated in terms of its best attribute, regardless of how poor other aspects of the alternative may by Ex: you have super high SAT nothing else matters
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o Lexicographic Strategy
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Takes most important criteria narrows it down, second most important criteria, so on so forth
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o Elimination by Aspect
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Given a probability proportional to its importance Compared by one aspect, inferiors eliminated, second aspect, so forth
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Simon, H.A. (1956). Rational choice and the structure of the environment.
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People Satisfice they DO NOT Optimize (RAT)
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Hit
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thought you saw/heard a signal and you picked up on it
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Miss
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Really was a signal but you missed it
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False Alarm
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You thought you saw a signal but there was not one (only noise no signal)
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Correct Non Detection
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there was no signal, you did not detect one
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The Law of Small Numbers:
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o People right down coin series to make it appear to look real o They forget to include long runs and rather include more alternations between H and T
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Gambler’s Fallacy
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belief that a successful outcome is due after a run of bad luck, o Roulette wheel has been red 10 times, it has to be black, but that is wrong.
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The Hot Hand:
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Gilovich, Vallane, Tverskyy (1985) people expect too many alternations, they do not expect long streeks
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Clinical Prediction:
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based on human judgement
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Actuarial Prediction
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based on data, emperical relations **Better then clinical
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Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases.
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Representativeness Heuristics, Anchoring, Avaliability
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Vividness
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how concrete or imaginable something is
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The Legal Significance of Guacamole:
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Bower (1980)o Presented in a legal testimony different level of detail o It has a huge effect later as time goes on, they can recall those small vivid details
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Borgida, E., & Nisbett, R.E. (1977). The differential impact of abstract vs. concrete information on decisions.
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Law of Small numbers, Face to Face vs Data, Concrete vs Abstract infromation, People ignore base rates
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