Judgement And Decision Making

Front 1

St Petersburg Paradox - where expected value is infinite on a coin toss game but participants aren't willing to risk large amounts of money to play.

Back 1

N. Bernoulli (1713)

Front 2

Solution of the St Petersburg Paradox - the more money that you have or win, the lower the utility of money. Introduces idea that decisions are based on utility rather than monetary value.

Back 2

D. Bernoulli (1738)

Front 3

Expected utility theory - states we should make our decisions by choosing the option with the highest expected utility.

Back 3

von Neumann and Morgenstern (1944)

Front 4

Demonstrated failure of invariance principle. How a gamble is framed in terms of a win or a loss can effect people's decision, even when they have the same expected value.

Back 4

Lichtenstein and Fischoff

Front 5

Demonstrated influence of framing effects and that people seek risk avoidance when there is a gain and seek a risk when there is a loss.

Back 5

Kahneman and Tversky (1981)

Front 6

Patients are more likely to choose a treatment which outlines the survival rate than one which expresses the same information as a mortality rate.

Back 6

McNeil et al. (1982)

Front 7

For financial choices, people make more effort to save money if it is a high % of something small compared to a small % of something large, even if the amount is the same value. (Calculator experiment)

Back 7

Kahneman and Tversky (1981)

Front 8

Subjective utility theory - a descriptive theory proposing that objective probability is not always available so should be substituted for subjective info.

Back 8

Savage (1954)

Front 9

Decision analysis states the outcome with the largest sum of outcome product utilities and probabilities should be selected.

Back 9

Raiffa (1968)

Front 10

Subjective probabilities often sum to more than 1 when alternatives are broken down

Back 10

Tversky and Koehler (1994)

Front 11

Experts who are used to providing estimates are often accurate e.g. weather forecasters and bookies

Back 11

Murphy and Winkler (1984)

Front 12

Experts who aren't used to providing estimates are often inaccurate e.g. doctors

Back 12

Christensen-Szalanski and Busheyhead (1981)

Front 13

People show poor judgement and overconfidence in general knowledge but these effects do diminish in more non lab/ecologically valid settings.

Back 13

Russo and Shoemaker (1989)

Front 14

EXPLORE MORE

Meta analysis of framing effects shows differences in results depending on study designs e.g. whether information presented is qualitative or quantitative

Back 14

Kuenberger (1998)