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15 Cards in this Set
- Front
- Back
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What is the Expected utility theory? |
People make decisions based on 'expected utility'. |
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What is expected utility? |
probability of an outcome x the value (or utility) of the outcome E.g. $40 000 x 0.2 = $8000 |
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What is the idea of avoidance of loss? |
A loss is more devastating than the equivalent gain is gratifying. |
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What is the framing effect? |
How a question is framed (or worded) can influence our decision. - positive and negative framing |
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What might a negative frame be useful for? |
- Trying to communicate the adverse health effects of fast food. - Political campaigns - people pay more attention to the bad news |
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Are you more likely to believe that global warming will cause a rise in sea level if you live on island that would consequently drown or if you live on an island protected from this by 50-foot cliffs? (Harris & Corner, 2011) |
On the island will drown. The consequences are immediately relevant to you. |
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What is the sunk cost effect? |
The tendency to continue investing in something that clearly isn't working. Avoidance of loss. |
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Do people have a preference for certainty? |
Yes. People are bad at calculating probabilities but it is easy to understand 100% so we have a preference for certainty. |
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What are heuristics? |
Cognitive shortcuts of rules-of-thumb |
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What is the representativeness heuristic? |
Using the prototype of a category (or concept) to represent instances of the category. |
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What decision-making fallacy might arise from reliance on the representativeness heuristic? |
Gambler's fallacy, hot-hand fallacy |
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What is the conjunction fallacy? |
Occurs when it is assumed that specific conditions are more probable than a single general one. |
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What is the availability heuristic? |
Forming a judgement on the basis of what readily comes to mind. |
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What is anchoring and adjustment? |
The adjustment of estimates based on some initial value. |
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What is metacognition? |
Thinking about thinking, knowing about knowing (???) |
