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20 Cards in this Set
- Front
- Back
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Homo Economicus
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rational actors should always make choices that maximize utility
must have well-ordered preferences both seem reasonable at first, but are tremendously demanding |
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Classic View of Judgment and Decisions
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People's judgments and decisions reflect their underlying beliefs and preferences
Choices REVEAL preferences |
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Axioms of Rational Decision Making
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ordering of alternatives (a>b, a<b, or a=b)
dominances (never choose a dominated strategy) independence of irrelevant alternatives description invariance |
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Constructed Preferences
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humans have unstable, inconsistent, incompletely evoked, and imprecise goals "at least in part because human abilities limit preference orderliness"
limitations to memory limited computation limited time |
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Reason-based decision making
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people do not always scale, weight, and combine attributes so as to maximize utility (the classic approach)
sometimes they make a decision based on what reasons are most readily available |
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Reason-based choice
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reasons for and against the selection of options
influence of irrelevant alternatives high vs. low conflict: seeking other options high vs. low conflict: deferring choice high vs. low conflict: seeking additional alternatives specific choice vs. disjunctive choice |
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Reasons for and against selection of options
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according to invariance axiom, equivalent tasks should produce equivalent choices
when we choose options, may focus on reasons for an option (pro reasons) when we reject options, may focus on reasons against an option (con reasons) |
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Choice under conflict: dominated/irrelevant options
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in theory, dominated options should not influence choices, but they really provide the illusion of a reason
other options compare favorably |
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Seeking other options
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In some contexts, need to decide whether to choose from available options, or continue looking
according to classic model, should only engage in search if the expected value of searching exceeds that of going with the best available alternative |
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Choice under conflict: deferring choice
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sometimes when faced with a difficult decision, a person will choose nonaction
dangerous in times of bad medical situations |
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Choice under conflict: adding options
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sure thing principle: not rational for people to incur a cost to get extra info that is not going to affect their decision
however, people may not have compelling reasons when faced with an uncertain outcome, but do when a definite outcome is brought about choice between vacation package, no vacation package, and paying to wait to make the decision |
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Illusory reasons are compelling at first
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asking to cut in line at xerox machine because you have to make copies works when it's just a few pages
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Reasons can degrade experience
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preferences are often affective or aesthetic - not based on a rational pros and cons list
enjoyment of wines degraded when you have to write about it |
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Framing effects
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options can be described in different but "equivalent" ways
frames can influence decision |
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3 Basic Types of Framing Effects
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Risky Choice Framing
Attribute Framing Goal Framing |
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Risky Choice Framing
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frame set of options with different levels of risk
risk preference is affected measured by comparison of choices for risky options 200/600 will die --> 400/600 will be saved |
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Attribute Framing
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frame object/event attributes
affect item evaluation measured by comparison of attractiveness ratings for a single item 75% fat --> 25% lean 10% mortality rate --> 90% survival rate |
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Goal Framing
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frame consequences or implied goals of behavior
affect impact of persuasion measured by comparison of rate of adoption of behavior mammogram to catch lump in time --> mammogram to avoid cancer |
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Reference Point Hypothesis
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hypothesized that the frame chosen by speakers tends to be one that increases relative to a reference point
if a cut of meat is more fatty that what is typically sold, then you are more likely to frame it as fatty half full/half empty based on how full it was before |
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When are framing effects irrational
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when they are random
but they are often chosen specifically, so they leak additional information about the situation |
