History of Psychology - Psychological Testing Quiz

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Questions and Answers

What does the Expected Value (EV) represent in decision theory?

  • The maximum possible outcome in a decision scenario.
  • The average outcome based on probabilities and values. (correct)
  • The total utility derived from all possible outcomes.
  • The likelihood of achieving the best outcome.

In Expected Utility Theory (EUT), how is utility derived from outcomes?

  • By taking the logarithm of monetary values.
  • By summing all monetary values.
  • By applying a concave value function to outcomes. (correct)
  • By multiplying probabilities with the square of outcomes.

What does Prospect Theory (PT) emphasize in decision-making?

  • The independence of utility from value.
  • The linearity of value functions in all contexts.
  • Rational decision-making based on probability.
  • The influence of psychological biases on choices. (correct)

What distinguishes the value function in Prospect Theory compared to Expected Utility Theory?

<p>It is typically concave, reflecting diminishing sensitivity. (B)</p> Signup and view all the answers

Given the example calculations, what is the Expected Value for the scenario with outcomes $100 and $0 weighted by probabilities 0.5 each?

<p>$50 (C)</p> Signup and view all the answers

In the context of Expected Utility Theory, what would be the expected utility for outcomes $80 and $0 with probabilities 0.5 each?

<p>40 (A)</p> Signup and view all the answers

What is a key finding of Prospect Theory in terms of decision-making under risk?

<p>Losses are felt more intensely than equivalent gains. (D)</p> Signup and view all the answers

How do Expected Value and Expected Utility differ fundamentally in their approach to decision-making?

<p>EV ignores risk while EU incorporates risk preferences. (B)</p> Signup and view all the answers

What principle does Expected Value Theory (EVT) primarily rely on for rational decision-making?

<p>Maximizing expected value (A)</p> Signup and view all the answers

Which theory replaces the concept of expected value with expected utility to address its limitations?

<p>Expected Utility Theory (B)</p> Signup and view all the answers

Which paradox was addressed by incorporating expected utility into decision-making frameworks?

<p>St. Petersburg Paradox (D)</p> Signup and view all the answers

In Expected Utility Theory, what does the utility of an outcome represent?

<p>The subjective value assigned to the outcome (B)</p> Signup and view all the answers

Which of the following is NOT an axiom of Expected Utility Theory?

<p>Risk Aversion (B)</p> Signup and view all the answers

What insight does Prospect Theory (PT) primarily offer in contrast to EUT?

<p>It recognizes behavioral biases in real-world choices. (C)</p> Signup and view all the answers

What does Expected Utility Theory argue regarding the significance of wealth to different individuals?

<p>A gain is more significant to a poorer individual than to a rich one. (D)</p> Signup and view all the answers

What is a key limitation of Expected Value Theory in real-world scenarios?

<p>It assumes individuals always maximize expected value. (A)</p> Signup and view all the answers

What fundamental assumption underlies the concept of Expected Utility in EUT?

<p>Decision-makers are rational agents. (D)</p> Signup and view all the answers

What is the primary distinction between Expected Value Theory (EVT) and Expected Utility Theory (EUT)?

<p>EUT considers subjective utility, whereas EVT does not. (D)</p> Signup and view all the answers

In Prospect Theory, how is the value function characterized for gains?

<p>It is concave. (A)</p> Signup and view all the answers

Which of the following correctly describes a key feature of the Expected Utility Theory (EUT)?

<p>Applies concave utility functions for outcomes. (C)</p> Signup and view all the answers

What phenomenon did Maurice Allais highlight in his critique of EUT?

<p>Independence paradox. (B)</p> Signup and view all the answers

Which of the following best describes the function of 'w(p)' in Prospect Theory?

<p>It represents the weighting of probabilities observed in decision-making. (C)</p> Signup and view all the answers

What aspect of decision-making does Prospect Theory primarily focus on?

<p>Descriptive accounts of how people make choices under uncertainty. (D)</p> Signup and view all the answers

What is represented by the concave shape of the utility function 'u(x)' in Expected Utility Theory?

<p>Diminishing marginal utility of wealth. (C)</p> Signup and view all the answers

How does Expected Value Theory determine optimal decision-making?

<p>By choosing the option with maximum expected return. (C)</p> Signup and view all the answers

Which historical figure is notably associated with the development of the Expected Utility Theory?

<p>Daniel Bernoulli (A)</p> Signup and view all the answers

What interpretation does Prospect Theory provide regarding how people perceive gains and losses?

<p>Losses are valued more heavily than an equivalent amount of gains. (D)</p> Signup and view all the answers

What does the term 'value function' imply within the context of Prospect Theory?

<p>It indicates the subjective value of outcomes rather than their objective value. (C)</p> Signup and view all the answers

Which statement describes the 'normative origins' of Expected Value Theory?

<p>It endeavored to provide a mathematical framework for rational decision-making. (C)</p> Signup and view all the answers

What is a critical criticism of EUT revealed by behavioral insights?

<p>It often fails to explain deviations from expected behavior. (A)</p> Signup and view all the answers

Flashcards

Expected Value Theory (EVT)

A theoretical framework that calculates the expected value of a decision by weighting possible outcomes by their probabilities and summing the results.

Integration of Value and Probability

A decision-making model that considers both the value and the probability of each potential outcome.

Utility

The subjective value assigned to a potential outcome, taking into account individual preferences and risk tolerance.

Expected Utility Theory (EUT)

A theory that assumes decision-makers choose the option with the highest expected utility, considering both the value and probability of each outcome.

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Prospect Theory (PT)

A behavioral theory that describes how people actually make decisions under uncertainty, often deviating from rational economic models.

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Concave Utility Function

The curvature of the utility function reflects the individual's risk attitude.

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Expected Utility Calculation

The expected utility of a decision is calculated by summing the utilities of each outcome weighted by their respective probabilities.

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Risk Preferences

The shape of the utility function reflects the individual's attitude towards risk. A concave function reflects risk aversion, while a convex function indicates risk seeking.

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Expected Value (EV)

The expected value (EV) of a choice is calculated by multiplying the probability of each outcome by its value and summing the results.

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Expected Utility (EU)

The expected utility (EU) theory replaces expected value with the utility of each outcome, accounting for individual preferences and risk attitudes.

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Daniel Bernoulli's Contribution to EUT

Daniel Bernoulli proposed replacing expected value with expected utility to account for individual risk preferences, addressing the St. Petersburg Paradox.

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Prospect Theory's Key Insights

Prospect Theory suggests that individuals are more sensitive to losses than gains and tend to overweight small probabilities, leading to biased choices.

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St. Petersburg Paradox

The St. Petersburg Paradox highlights the limitations of expected value by demonstrating that a rational decision-maker would accept an infinitely high bet even with a small probability of winning.

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Axioms of EUT

The axioms of EUT define a rational decision-maker, including completeness (preference between options), transitivity (consistency of preferences), independence (ignoring redundant information), and continuity (smoothness of preferences).

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Repeated Choices in Lotteries

A research approach where participants repeatedly make choices in a controlled environment, often involving lotteries with varying probabilities and payoffs, to understand decision-making processes.

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Shift from Normative to Descriptive Models

The shift from normative models of decision-making, such as EVT and EUT, which aim to explain rational behavior, to descriptive models, such as PT, which aim to explain actual behavior.

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Concave Value Function for Gains (PT)

The value function in Prospect Theory is concave for gains, meaning people are risk-averse for gains. This means they are less willing to gamble for larger gains because they value the certainty of a smaller gain more highly.

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Convex Value Function for Losses (PT)

The value function in Prospect Theory is convex for losses, meaning people are risk-seeking for losses. This means they are more willing to gamble to avoid a larger loss because they perceive the potential for a small gain as better than the certainty of a large loss.

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Probability Weighting Function (PT)

The probability weighting function is used to adjust how people perceive the probabilities of different outcomes. It shows that people tend to overweight low probabilities and underweight high probabilities.

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Allais Paradox

The Allais Paradox is a classic example that challenges the Expected Utility Theory. It shows that people sometimes violate the independence axiom, which states that preferences should be independent of other irrelevant options.

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Blaise Pascal and Pierre de Fermat

Pierre de Fermat and Blaise Pascal are credited with developing the first mathematical approach to decision-making under uncertainty.

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Historical Context Decision-Making

A decision-making framework that emphasizes the importance of considering the historical context of a decision. It suggests that understanding past experiences and their impact on our perceptions can help us make better choices.

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Loss Aversion

In decision theory, the 'loss aversion' effect refers to people's tendency to feel the pain of a loss more strongly than the pleasure of an equivalent gain.

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Framing Effect

This is the phenomenon when people make different choices depending on how the options are presented or framed.

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Independence Axiom (EUT)

The independence axiom is a key element of expected utility theory, but it's been challenged. This axiom states that preferences should be independent of irrelevant options or information.

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Decision-Making Framework

A method of decision-making that involves evaluating the potential outcomes of different options and assigning a value to each outcome.

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Study Notes

Course Evaluation

  • Complete the course evaluation for History of Psychology within 5 minutes
  • Results will be discussed next week

Session Information

  • Sessions are on Mondays, 8:15-9:45, in the Chemie, Organische, Grosser Hörsaal OC
  • Course schedule includes topics like Introduction, Pre-psychology, The birth of psychology, Psychoanalysis, Behaviorism, Gestalt psychology, Cognitive psychology, Psychology today, Psychotherapy research, Psychological testing, Decision science, and What kind of science is psychology?
  • Instructors for different sessions are Tisdall and Mata

Agenda

  • Mock exam solutions, questions due Friday (December 6) via ADAM, discussion during December 9 session
  • Recap of Psychological Testing (15 minutes)
  • Decision Science (60 minutes)

Recap: History of Psychology - Session 10

  • Topic: Psychological Testing
  • Instructor: Loreen Tisdall
  • Date: November 25, 2024

Psychological Testing and Psychometrics: Four Phases and Major Events

  • Divided into four phases (1880s-1890s, 1900s-1910s, 1920s-1940s, 1950s-present)
  • Each phase has key events like publication of texts by Francis Galton, James McKeen Cattell, Karl Pearson, and others leading to the development and standardization of psychological tests
  • Includes development of scales, tests, and psychometric methods.

Wechsler Intelligence Scales

  • Developed by David Wechsler
  • Multiple versions (WAIS, WISC, WPPSI-IV)
  • Involves point scales rather than chronological age scales
  • Designed to capture different latent constructs of intelligence
  • Aligns with Cattell-Horn-Carroll three-stratum model of intelligence

Behavioral Genetics

  • Summary of 111 studies on familial resemblances in intelligence
  • Correlational patterns consistent with a polygenic mode of inheritance
  • High heterogeneity in correlations within familial groupings
  • No clear moderation by sex or type of intelligence test

25-Point Consensus on Intelligence and Testing

  • Intelligence is defined as a general mental capability, encompassing reasoning, planning, problem-solving, abstract thinking, learning, and learning from experience.
  • Intelligence tests are accurate, measuring cognitive abilities, not personality or creativity.

More Consensus on Intelligence and Testing

  • Mental tests have predictive validity
  • Correlations between general mental ability (GMA) scores and job performance are significant.

Summary (Psychological Testing)

  • Testing initially driven by eugenics and objective measurement, with a focus on theory and application in real-world problems
  • Measurement standardization, standardization of scoring, component distinctions (e.g., verbal vs. non-verbal), norms for different ages, and development of statistical methods are key to developing tests
  • Conceptual issues focus on agreement on theoretical and biological bases, and environmental factors are considered
  • Main applications include personnel selection and job performance, academic achievement.

History of Psychology - Session 11

  • Topic: Decision Science
  • Instructor: Loreen Tisdall
  • Date: December 2, 2024

Learning Objectives for Today

  • Utility as an important concept in psychology and economics
  • Key differences between models of choice under uncertainty

Your Turn!

  • What is the main aim of decision science?
  • What disciplines inform decision science?
  • What relevance does decision science have?
  • One-minute discussion.

Decision Science: Useful Terminology

  • Field that studies how decisions, optimally and actually, are made and how to bridge the two
  • A multidisciplinary field with input from various disciplines, including psychology, engineering, economics, mathematics, philosophy, and statistics
  • Critical concepts include decision-making under uncertainty: distinguishing risk and Knightian uncertainty, along with deviations from rational models, heuristics, and biases.

Normative, Descriptive, and Prescriptive Models

  • Normative models describe optimal decision-making by ideal agents.
  • Descriptive models elucidate how human beings actually make decisions, accounting for biases and heuristics.
  • Prescriptive models aim to improve decisions by integrating normative and descriptive insights.

From Normative to Descriptive Models

  • Transition from normative (ideal) models to descriptive (realistic) models: Expected Value Theory, Expected Utility Theory, and Prospect Theory.
  • Explaining the development of models

Integration of Value and Probability

  • Examining the intersection of value and probability in different choice models: EVT, EUT, and PT

Repeated Choices in Lotteries

  • Example of a choice design using lotteries

Summary (Decision Science)

  • Utility is a subjective value central to decision science, with models explaining choices under uncertainty, like Expected Value Theory (EVT), Expected Utility Theory (EUT), and Prospect Theory (PT).

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