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23 Cards in this Set

  • Front
  • Back
Decision
A choice among possibilities
When does a decision occur?
When a person with an unfulfilled need takes an action to satisfy that need.
Normative THeories of Decision Making
Focus on how we SHOULD make decisions
Descriptive Theories of Decision Making
Focus on how we actually make decisions not on how we should!
The Decision Tree
Represent the course of action that we could take
What 3 things make up a decision?
1. Alternatives
2. Beliefs
3. Consequences
Alternatives
Different courses of action, options, choices, and strategies available to the decision make
Belief
OUr estimate of the likelihood that a particular outcome will occur if we choose a particular alternative
Consequences
The benefits or losses that you recieve or experience from the choice of a certain alternative.
Outcome
Value
Utility
1. The result
2. The net worth
3. The desirability of the value to you
Subject Expective Utility Model
1. Assumes rational behaviour on the part of the decision maker.
2."what's it worth to you"
3. The utility of a certain outcome, weighed by the likelihood of that outcome occuring.
Limitations of SEU Model
1. overweigh small possibilities
2. overestimate unlikely events and underestimate likely events.
3. We are not perfect calculators.
Framing Effects
The influence of various ways that a problem may be put
Prospect Theory
The 1st stage of decision making is understanding the prospects ahead by framing the terms of the deciision.
Framing
Simplifying and combining some quantities and evaluating prospective gains and losses in relation to a reference point
Reference Point
The current situation before a decision is made
Representative Heuristic
Shy and tidy: librarian/teacher/lawyer
Availability Heuristic
More deaths: Lung cancer/motor deaths or same?
Anchor and Adjust
asking price effect on house price estimate
Elimination by Aspects
A strategy that succesively evaluates a possible choice on a number of attributes, eliminating the choices that do not measure up to criteriom.
Algorithm
A step by step recipe for making a decision
Satisficing
A method that finds not necessarily the best of all possibilities but one that is good enought to meet the desires of the decision maker.
Somatic Markers
Emotional signals that warn us that imporant events are about to occur.