Error And Bias Exam 1 Week 2

Front 1

Homo Economicus

Back 1

rational actors should always make choices that maximize utility

must have consistent, well-ordered preferences

both seem reasonable at first, but are tremendously demanding

SPOCK

Front 2

Bounded Rationality

Back 2

humans are imperfect, but seek to optimize accuracy

Herb Simon also conceptualized satisficing

Front 3

Fundamental Principle of Judgment

Back 3

speed-accuracy trade-off

for functional reasons, human judgment is often driven by speed more than accuracy

Front 4

Behavioral Decision Theory

Back 4

examines how REAL decisions match with decisions based on "rational" decision making

Front 5

Heuristics

Back 5

Kahneman and Tversky

Attribute substitution and Effort reduction

rules of thumb or short-cuts used on complicated judgment and decision tasks

not irrational - they usually make sense, but can lead to misjudgments

Front 6

Original Big 3 Heuristics

Back 6

Representativeness
Availability
Anchoring

Front 7

Representativeness Heuristic

Back 7

Judgment: is instance A a member of category B?

Shortcut: how much does A resemble a prototypical instance of category B?

Conjunctive fallacy: conjunctive events cannot be more likely than either event alone

Perceptions of Randomness
Law of Small Numbers (people want random sequences to be more mixed than they'd usually be)
Hot Hand (under-appreciate randomness)
Gambler's Fallacy (over-appreciate randomness)
Neglecting base rates (lawyer or engineer?)
Nonregressive prediction (regression to the mean)

basic idea: for intentional behaviors, people think streaks will continue; for non-intentional behaviors, people think streaks will end

Front 8

Availability Heuristic

Back 8

Judgment: How frequently does event A occur?

Shortcut: Do examples of event A come to mind easily?

Outcome: event A is judged to occur frequently to the extend that instances of event A are easily available in memory

Front 9

Anchoring and Adjustment

Back 9

people look for a place to "start" judgment, then "adjust" from this anchor

anchor is "sticky" - people don't adjust sufficiently, so where you start affects the judgment

thought to be a heuristic, but not anymore (no attribute substitution)

Front 10

Dual-Process view of decision making

Back 10

Intuition and Effortful Reasoning