Chapter 12 - Decision Making (Sternberg) PDF

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12. Decision Making andReasoningJudgment and decision making are used to select from among choices or to evaluate opportunitiesClassical Decision Theory The Model of Economic Man and Woman - Decisions makers are fully informed regarding possible options - Gaining info by option - Ex. Choosing your b...

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12. Decision Reasoning

Making

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Classical Decision Theory The Model of Economic Man and Woman - Decisions makers are fully informed regarding possible options - Gaining info by option - Ex. Choosing your brand when buying smartphone.

Biases Illusory Correlation = People are predisposed to see particular events or attributes and categories as going together, even when they do not (contradiction on both ends but one is unrelated to the situation) Overconfidence = an individual’s overvaluation of her/his own skills, knowledge, or judgement Hindsight Bias = When people look at a situation retrospectively, they believe they can easily see all the signs and events leading up to a particular outcome.

Subjective Expected Utility Theory - The goal of human action is to seek pleasure and avoid pain in making decisions, people will seek to maximize pleasure

3 Levels of Hindsight Bias 1. Predictability 2. Inevitability 3. Memory Distortion

Heuristics = mental shortcuts that lighten the cognitive load of making decision  Satisficing = accepts what’s good enough  Maximizing = exhaustively seeks the best

Fallacies Gambler’s Fallacy = a mistaken belief that the probability of a given random event, such as winning or losing at a game of chance, is influenced by previous random events.

Elimination by Aspect = making a decision in 3 aspects (What is cheap, what is good or what is your mama’s favorite)

Hot hand effect = a belief that a certain course of events will continue.

Judgment and decision making are used to select from among choices or to evaluate opportunities

Representative Heuristics = imaginary picture of people (salient features)  how obviously it is similar to or representative of the population from which it is derived Availability Heuristics = information you use to make a decision from what you have seen recently (from what you’ve seen in the NEWS. -> frequent, recent, extreme, vivid, negative) Anchoring Bias = people adjust their evaluations of things by means of certain reference points (1000USD to 250USD only sale! – notices the discount from its original price) Framing Effect = people sticks to what they hear or seen as something more heavily impacts them (we have almost cleaned the Manila Bay vs. Manila Bay has been cleaned at 4.6% scale) Fast and Frugal Heuristics = no time to initiate a decision immediately (Condition 1 > T or F? Why False? Results to Condition 2 > T or F?) Single Criterion = You have an ideal type or criteria to a certain requirement, need. (ex. Wymberly will only marry a man who graduated in the University of the Cordilleras)

Conjunction Fallacy = An individual gives a higher estimate for a subset of events that for the larger set of events containing the given subset Sunk Cost Fallacy = Represents the decision to continue to invest in something simply because one has invested for it for a long time but it’s not even worth it anymore. Opportunity costs = the prices paid for availing oneself of certain opportunities (paying your tuition to graduate) Naturalistic decision making = your decision is not affected by any external factors Group decision making = same personalities when it comes in deciding to a problem Groupthink = a phenomenon characterized by premature decision making that is generally the result of group members attempting to avoid conflict  Devil’s Advocate = contradicts the current decision for others to be motivated against the decision made.

Reasoning = the process of drawing conclusions from principles and from evidence Types of Reasoning Deductive Reasoning = the process of reasoning from one or more general statements regarding what is known to reach a logically certain conclusion, often to a specific application of the general statement.  Proposition = an assertion, which may be either true or false  Premises = propositions about which arguments are made Mental model = an internal representation of information that corresponds analogously with whatever is being represented...