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10 Cards in this Set

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What theory did Jeremy Bentham & Mill come up with for decision making?
Economic Utility Theory

The use of all rational options to maximize utility
Economic Utility Theory
What are the assumptions of Economic Utility theory and who developed the theory?
People are completely informed of all options and their consequences

People are sensitive to the differences in these options

People will make decisions to maximize some utility
Jeremy, Bentham & Mill
Who came up with the concept of Satisficing?

What is the concept of satisficing?

We consider the options until we find one that works.
"good enough option"
Humans are not rational
What is the Lens Model? Who came up with it?
Brunswick in 1934.

You make decisions through the lens of perception. Multiple cues in environment (that can be ambigious and fallible) are used to make decisions.
decision making
What is decision making?
Involves generating, selecting, and or evaluating relevant choices, where the rules for deciding are not obvious and the choices involve some risk or uncertainty
What is the classsical decision making approach?
developed primarily by economists who believed that people are always rational and carefully consider all of the options
What is the representativeness Heuristic?

Who developed it?
(Kahneman & Tversky, 1972)

The tendency to assume that, if an object is similar to members of a particular category, it is probably a member of that category itself.
social stereotypes
What are the types of misapplications of heuristics?
Gamblers Fallacy

Law of Large numbers

Availability Heuristic
What is the gamblers fallacy?
belief that if an event has not occurred for a while, then it is more likely to occur in the near future
What is the Law of Large Numbers?
Large samples will be representative of the population from which they have been selected.
ex. Hospitals and M v F birth rate.