Behavioral Economics Flashcards: Mastering Cognitive Biases

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Questions and Answers

What is the effect of the 2nd option on the order of preference between options 1 and 3 in the case of choosing a journal subscription?

It reverses the order of preference between options 1 and 3 (correct)

It increases the preference for option 1 over option 3

It eliminates the preference for option 3

It has no impact on the order of preference

What is the primary goal of Drew Westen's experiment in the case of detecting contradictions?

To analyze the brain activity of political partisans (correct)

To compare the decision-making processes of liberals and conservatives

To evaluate the rationality of political judgments

To identify the contradictory statements of politicians

What is the result of Drew Westen's experiment in terms of the judgment of contradictory statements?

Liberals judged Kerry's statements as contradictory and Bush's statements as noncontradictory, and vice versa for conservatives

Liberals tended to judge Kerry's statements as noncontradictory and Bush's statements as contradictory, and vice versa for conservatives (correct)

The judgment of contradictory statements was not influenced by political affiliation

Liberals and conservatives judged both Kerry's and Bush's statements as contradictory

Is the behavior observed in the case of choosing a journal subscription considered rational?

No, because it is influenced by an irrelevant option Signup and view all the answers

What is the main implication of Drew Westen's experiment in terms of rational decision-making?

Political partisans tend to be irrational and biased in their judgments Signup and view all the answers

What is the common theme between the two cases discussed in the text?

The influence of external factors on decision-making Signup and view all the answers

What is the title of the book referenced in the text that discusses the hidden forces that shape our decisions?

Predictably Irrational Signup and view all the answers

What is the primary assumption of Behavioral Economy?

Economic agents do not follow their best interest Signup and view all the answers

According to Plato, what role should Reason play in relation to passions?

Reason should be the master of passions Signup and view all the answers

What is the primary function of practical Reason according to Hume?

To adapt means to ends Signup and view all the answers

What is the role of desires in Hume's philosophy?

Desires give the ends, and Reason calculates the means Signup and view all the answers

What is the question raised regarding practical Reason in the context of Hume's philosophy?

Can practical Reason give us absolute prescriptions independent of desires? Signup and view all the answers

What is the concept of Reason that is described as 'instrumental'?

Reason as the calculator of means to achieve ends Signup and view all the answers

What is the reference to Immanuel Kant's philosophy in the context of this discussion?

A discussion of absolute prescriptions independent of desires Signup and view all the answers

What is the primary function of desires according to the synthesis mentioned in the text?

To provide the ultimate goal or destination Signup and view all the answers

What is the primary orientation of theoretical Reason according to Aristotle?

Towards knowledge and understanding Signup and view all the answers

What is the consequence of desires preventing Reason from playing its role?

Something is going wrong Signup and view all the answers

What is the role of Reason in the synthesis mentioned in the text?

To lead on the right path to achieve our ends Signup and view all the answers

What is the relationship between truth and coherence in the context of theoretical Reason?

Coherence is a prerequisite for truth Signup and view all the answers

What is the implication of theoretical Reason being impeded by faculties not oriented at truth?

It is very inconvenient to arrive at our ends Signup and view all the answers

What is the primary function of desires in the context of practical Reason?

To give the ultimate goal or destination Signup and view all the answers

What is the relationship between desires and Reason in the synthesis mentioned in the text?

Desires and Reason should complement each other Signup and view all the answers

What is the primary goal of theoretical Reason according to the text?

To understand truth and coherence Signup and view all the answers

What is the implication of desires not providing the ultimate goal or destination?

There will be an impediment to achieving our ends Signup and view all the answers

What is the primary consequence of disregarding contradictions, according to Result 2?

Providing positive emotions Signup and view all the answers

What is the term for the irrationality of not tracking one's own best interest?

Practical irrationality Signup and view all the answers

Which philosopher described the human soul as having three parts?

Plato Signup and view all the answers

What is the purpose of the Rational part of the soul, according to Plato?

To rule the entire soul Signup and view all the answers

What is the term for the harmony achieved when the Rational part of the soul rules?

Real freedom Signup and view all the answers

Which part of the course will explore the question of human origin and purpose?

Part III Signup and view all the answers

What is the allegory used by Plato to describe the role of Reason in the soul?

The Chariot Allegory Signup and view all the answers

What is the primary goal of adapting our beliefs according to the Third Principle of Reason?

To correspond with the facts and evidence Signup and view all the answers

What is the primary characteristic of a theory that is internally coherent but has no link to the facts?

It is a conspiracy theory Signup and view all the answers

What is the principle that guides our choices to ensure they align with our best interests?

Principle of Means-Ends Signup and view all the answers

According to the concept of Practical Reason, what is the primary flaw in our journal subscription choices in the example given by Dan Ariely?

We fail to adapt our means to our ends Signup and view all the answers

What is the term used to describe the rationality of adapting our choices and means to our best interests?

Economic Rationality Signup and view all the answers

What is the primary objective of the Faculty of Reason?

To adapt our beliefs and choices to the facts and evidence Signup and view all the answers

What is the term used to describe the principle that our beliefs should correspond with the facts and evidence?

Norm of Truth Signup and view all the answers

Study Notes

Irrationality and Reason

Irrationality can manifest in two ways: irrational preferences, where individuals do not track their own best interest, and irrational blindness to contradiction, where individuals do not track truth.

The Faculties of the Mind

Traditionally, the mind is comprised of Reason, Passions, and Desires, with Reason being the rational part, Passions being the spirited part, and Desires being the appetitive part.
According to Plato, the soul has three parts: Rational, Spirited, and Appetitive, and the proper harmony of the soul is when the Rational part rules.

Practical Irrationality

Case 1: choosing a journal subscription, where the 2nd option changes the order of preference between options 1 and 3, showing irrational preferences.
Case 2: detecting contradictions, where partisans tend to judge statements attributed to their preferred candidate as non-contradictory and statements attributed to the opposing candidate as contradictory.

The Faculty of Reason

The norms of Reason include Internal Coherence, Orientation to Truth or Facts, and the Norm of Truth or Evidence.
Theoretical Reason is oriented towards knowledge and Truth, whereas Practical Reason is oriented towards action and adapting means to ends.
The principles of Practical Reason include the Principle of Means-Ends and the Principle of Best Interest, which together form Economic Rationality.

Should Reason "Rule"?

Plato argues that Reason should rule, as it provides coherence and harmony in the soul.
Hume, on the other hand, argues that Reason is a slave to the passions and should only adapt means to ends given by desires.
There is an element of truth in both perspectives, with Reason playing a role in maintaining coherence and adapting means to ends, but also being influenced by desires and passions.

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Description

Test your understanding of behavioral economics and cognitive biases through these case studies inspired by Dan Ariely and Drew Westen's research. Explore how our decisions are shaped by hidden forces and how our brains respond to contradictions.

Behavioral Economics and Cognitive Biases