187 Questions
What is the relationship between the quality of good decisions and bad decisions?
Good decisions are rated higher on the quality dimension than bad ones
How do participants rate the importance of their bad decisions compared to their good decisions?
Participants rate their bad decisions as significantly less important than their good decisions
Why are good decisions coded as good and bad decisions coded as bad?
Good decisions are coded as good because they produce good outcomes, while bad decisions yield bad outcomes
What is the main difference between decision and judgement research?
Decision research focuses on coherence of beliefs and preferences, while judgement research focuses on correspondence between subjective and environmental states.
What did Herbert Simon propose as a consideration for assessing the rationality of human behavior?
Both the person and the environment in which that person operates
What did Bernoulli exchange the notion of expected value with?
Expected utility
What is one of the axioms of expected utility theory?
Transitivity
What is one of the factors that affects the quality of a decision?
The probability of the outcome occurring
Based on the text, how are good decisions coded as good?
Because they produce good outcomes
What does the positive retrospect bias suggest?
Cognitive dissonance about bad decisions
What is the main tool of social judgment theorists?
The lens-model
What did Savage prove about a person's choices?
They maximize expected utility
What is one of the psychological caveats incorporated in expected utility theory?
The utility of money declines with increasing gains
What impact did evidence of human behavior contradicting expected utility theory have on judgment and decision-making research?
It led to the modification of expected utility theory to make it a better descriptive theory
What does the left-hand side of the diagram in the lens model represent?
The 'real world' where the event exists
What is the principal technique used in learning novel cue-outcome relations?
Multiple-cue probability learning (MCPL)
What is the role of the expert in a mechanical combination?
To feed the machine with data
What is the adaptive toolbox proposed by Gigerenzer (1999)?
A collection of specialized cognitive heuristics suited to different problems
What are the two principles of the Take the best (TTB) strategy?
Recognition principle and stopping rule
What does the empirical data suggest about the use of fast-and-frugal heuristics?
Mixed support with evidence of individual differences
Which strategy considers each alternative one at a time and makes a summary evaluation of it before considering the next one?
Alternative bases strategy (ABS)
According to McClelland and Lange, what makes decision-making difficult for consumers?
Conflicting attributes
What is the main difference between compensatory and non-compensatory strategies in decision-making?
Compensatory strategies consider all information
Why can a simple statistical model outperform human predictions?
All of the above
What is the key process in decision-making?
Incorporating new predictive cues
What did the experiment by Klayman show about participants' ability to predict outcomes?
Participants could discover valid cues among explicit and inferred cues
Why did participants under-purchase good reports in the study on setting production quotas?
Immediate and certain information costs outweighed delayed and uncertain payoff
According to Payne, Bettman & Johnson (1993), what is the trade-off involved in deciding how to decide?
Accuracy of decision vs effort involved in making it
According to the MC framework, what is the relationship between monitoring and control?
Monitoring and control have a reciprocal relationship
What is one finding related to experiences of uncertainty and control behaviors?
If experiences of uncertainty are maintained, no improvements in control behaviors will be observed
According to Osman, what is the impact of extended practice on performance?
Extended practice alone does not necessarily lead to improved performance
Which of the following is NOT one of the components proposed by Brehmer (1979) for ascertaining the best way to use information provided by cues?
Learning about the outcome feedback
In a typical MCPL task, when does outcome feedback typically lead to improvements in performance?
When the environment is very simple (2/3 cues max.)
Why can learning be impeded by outcome feedback if the functions relating the cues to the criterion are negative or non-linear?
Because outcome feedback can lead to incorrect learning when the functions are negative or non-linear
According to Brehmer, why is learning from outcome feedback difficult in probabilistic tasks?
Participants do not have the cognitive schemata needed for efficient performance.
According to Todd & Hammond, why is learning from outcome feedback difficult in most MCPL tasks?
The outcome feedback does not provide the necessary information to improve performance.
What is the difference between feedback and feedforward in the context of learning from experience?
Feedback provides trial-by-trial information, while feedforward provides task information transmitted through instructions.
What did Newell's study on cognitive feedback and outcome feedback in binary-cue MCPL tasks suggest?
Cognitive feedback after each prediction improves performance more than outcome feedback alone.
According to Brehmer and Allard, what are the three important characteristics of dynamic decision tasks?
- They require a series of interdependent decisions 2) The state of the task changes over time, autonomously and as a consequence of the decision maker’s actions 3) Decisions must be made in real time
What did Brehmer conclude about participants' behavior in dynamic decision tasks?
Participants may not perform optimally, but their behavior is at least reasonable in the sense that it gets the job done
According to Osman, what does monitoring involve in the Monitoring and Control (MC) framework?
Task monitoring (environment) and self-monitoring (tracking one’s goals)
What is the central notion in the Monitoring and Control (MC) framework proposed by Osman?
Psychological uncertainty mediates both task- and self-monitoring, which in turn affect control behaviors
Which principle of probability theory is violated when rating the combined occurrence of a heart attack and being 55 years old as more probable than their separate occurrences?
The principle of coherence
Which approach to the analysis and appraisal of probability judgments focuses on the fit between judgments and the external environment?
Correspondence theories
What do Ramsey and de Finetti show about the laws of probability in relation to judgments or beliefs?
They provide consistency constraints on judgments or beliefs
What is a potential risk of using a naïve approach to Bayesian updating?
Overweighting the evidence when items of evidence are causally related
What is one of the advantages of using Bayesian Networks for probabilistic reasoning with multiple interrelated variables?
They provide a normative framework for probabilistic reasoning
In what situations are Bayesian Networks particularly useful?
When there is a network of related hypotheses and evidence
According to frequentist theories, what do probability judgments concern?
The range of probabilities (relative frequencies) depending on the chosen reference class
What does Bayes' rule provide a normative rule for?
Updating one's probability judgments in the light of new evidence
What does the Likelihood Ratio compare in Bayesian updating in legal reasoning?
The probability of the evidence on the supposition that the target hypothesis is true and false
What does Bayes' rule tell us how much to adjust in Bayesian updating?
The posterior belief in a hypothesis based on new evidence
Which of the following best describes attribute substitution?
When people answer an easier question instead of the original question
What is base-rate neglect?
The tendency to neglect the base-rate information when making probability judgments
What is the conjunction fallacy?
The tendency to believe that a conjunction is more probable than its conjuncts
What is the availability heuristic based on?
Assessment of the ease of recall or generation
What is the term used to describe the pattern where the judged support for a disjunction is assumed to be greater than the judged support for one of its exclusive subcomponents?
Implicit subadditivity
What is the main focus of correspondence-based methods for evaluating probability judgments?
Comparison of judgments with actual frequencies
What is the purpose of calibration in probability judgment assessment?
To evaluate the accuracy of judgments
According to support theory, subjective probabilities are derived from judgments of what?
The strength of evidence
What is one of the central claims of support theory?
Probability judgments are description-dependent
What is the disjunction fallacy?
Ranking subordinate categories as more probable than superordinate categories
Why do people make conjunction errors according to the text?
They respond with judgments of evidential support instead of condition probability
What is the main difference between the inside view and the outside view?
The inside view focuses on individual cases, while the outside view focuses on distributional features
What evidence supports the nested-set hypothesis?
Empirical data showing that the frequency format is neither necessary nor sufficient for facilitation
How can the two positions of frequentists and nested-sets be reconciled?
Frequency processing can serve as a form of natural assessment and frequency formats might simplify the computations necessary to solve a probability problem
How do people make category inferences?
By making multiple uncertain categorizations in the service of a prediction
What is the frequency effect described in the text?
The reduction of judgmental biases when probability problems are presented in a frequency format
According to Gigerenzer and colleagues, what are natural frequencies?
Frequencies that have not had base-rate information filtered out
What is the nested-sets hypothesis proposed by Tversky and Kahneman?
The preference for using representative or associative thinking in intuitive probability judgments
Which of the following is NOT one of the core ingredients for any decision problem?
Consequences
What is the second step in analyzing decisions?
Assigning utilities to the different outcomes
What is the rule that takes one from the specifications to the correct decision?
Maximizing expected utility
According to expected utility theory, which of the following is one of the basic axioms that agents must obey?
Transitivity
Which principle of decision-making is violated in the Allais paradox?
Invariance principle
What is Savage's plausible explanation for why people prefer option A over option B in the Allais paradox?
The slight chance of winning nothing in B does not compensate for the extra chance of winning a large amount
In Ellsberg's problem, what is a challenge to the sure-thing principle?
People reason differently when they know the exact probabilities than when they do not
According to prospect theory, how do people evaluate outcomes?
In terms of gains or losses relative to a neutral reference point
What is one of the key characteristics of the value function in prospect theory?
It is a concave function of money
How do people perceive outcomes in terms of gains and losses?
They perceive outcomes as gains or losses relative to a neutral reference point
What happens to preference reversals when people have the opportunity to make repeated decisions?
They tend to be eliminated or reduced
What do preference reversals tell us about decision theory?
Preferences are not always stable
What are preferences often influenced by?
Individual's goals and expectations
Which phenomenon describes the reluctance to give up something, even if offered a higher price than its original value?
Endowment effect
Which bias explains the preference for staying in the same state rather than taking a risk and moving to another state?
Status quo bias
Which pattern describes risk-seeking behavior for small probabilities and risk-aversion for medium and large probabilities?
Medium and large probabilities Risk-aversion
Which effect refers to the preference for a certain win over a probable win with greater expected monetary value?
Certainty effect
Which theory does decision-by-sampling (DbS) strive to address?
Prospect theory
What does decision-by-sampling (DbS) claim about people's subjective values of probability?
They are influenced by recently experienced events
Which hypothesis suggests that different forms of elicitation draw emphasis to different features or dimensions of a problem?
Compatibility hypothesis
What does the evaluability hypothesis propose about attribute evaluation in decision-making?
Some attributes are harder to evaluate than others
Which bias often influences recollections of attitudes and can lead to distortions whereby people tend to be biased to take credit for favorable outcomes and avoid blame for unfavorable ones?
Self-serving bias
What is the term used to describe the difficulty people have with thinking about something that's inconsistent with reality?
Counterfactual thinking
What is one important way to commit oneself to a task?
Setting a deadline
What are commitments commonly used for?
Controlling intertemporal decision-making
Which brain systems are activated with immediate outcomes?
β systems
What is the paradox of addiction?
A craving for instantaneous pleasure from a drug co-exists with a strong desire to give up the drug in the future.
What is attention myopia?
The tendency to focus only on the most salient features of an object.
What happens to consumption when attention is decreased and the salient features of an object are inhibitory?
Consumption decreases.
Why do people tend to make unsatisfactory decisions?
They believe their current preferences are stable and intrinsic
What did Galotti's study on recall of factors in decision-making reveal?
Participants tend to recall factors that they did not put emphasis on
What is the peak-end rule?
A rule that states people remember the peak and end of an experience
What did Harley's study on bias in recall of faces find?
Participants tend to think they identified the face earlier than they did
According to the peak-end rule, people have a strong preference for sequences that include more total pain and neglect the duration of a pleasant or unpleasant event. This preference is illustrated by the fact that people preferred the sequence 2-4-6 over the decreasing sequence: 6-4-2.
People prefer sequences that include more total pleasure
According to the concept of discounting future events, the value of an outcome or commodity should be discounted as a function of how far into the future it is delayed. Which model of discounting suggests that an individual’s rank ordering of the value of various future outcomes can change with the passage of time?
Hyperbolic model
What is the psychological mechanism underlying the hyperbolic function of discounting future events?
Psychophysics of time perception
In time-based decisions, what is the concept of discounting future events analogous to when considering monetary assets and liabilities?
Interest rate
According to the Weber-Fechner law, how is time perceived?
Three weeks is perceived as being less far in the future than one week
Which of the following is inconsistent with the normative exponential model of discounting?
Discount rates tend to be the same regardless of the value or timing of the outcome
What does the concept of fungibility refer to?
The exchangeability of money for other goods or services
What is one of the observed properties of discount rates that is inconsistent with the normative model?
All of the above
Which of the following is the definition of affective forecasting?
The ability to predict in advance how much pleasure or pain an experience will give us
What is one of the explanations for the impact bias?
People fail to appreciate that the focal topic of an event will be much less prominent in their future lives than they imagine
How can affective forecasting errors be reduced or eliminated?
By reminding people that the focal outcome will be only one of the numerous events competing for their attention
According to Risk as feelings (Loewenstein), what is the relationship between emotions and cognitive evaluations in reasoning and decision-making?
Emotions and cognitive evaluations sometimes diverge.
What evidence supports the notion that people are more sensitive to departures from certainty and impossibility for affect-rich prizes?
The relationship between emotion and over-weighting.
How does the presentation of statistical information influence the vividness of images?
Presentation in frequencies generates a more vivid effect.
What does exemplar cueing theory propose about the imaginability of exemplars?
The use of a frequency format is not the crucial factor underlying the imaginability of exemplars.
According to Zajonic's primacy of affect theory, affective reactions to stimuli may precede cognitive reactions and thus require no cognitive appraisal. He also argued that our choices are determined by no more than simple likes or dislikes.
Affective reactions to stimuli do not require cognitive appraisal.
According to Damasio's somatic marker hypothesis, individuals with prefrontal cortex (PFC) damage have lost the ability to mark scenarios with positive or negative feelings. As a result, they do not exhibit the appropriate anticipatory emotions when considering the future consequences of decisions.
Individuals with PFC damage have lost the ability to make any decisions.
According to the affect heuristic, affect can serve as a cue for a variety of judgments. Participants' judgments about the risks and benefits of an option could be altered by manipulating its global affective evaluation.
Affect can influence judgments about risks and benefits.
Finucane's study demonstrated that information about one attribute (e.g. risk) can have a carryover effect on another attribute (e.g. benefits) even if no information was directly learned about it.
Information about one attribute can have a carryover effect on another attribute.
According to the received wisdom, what is the general belief about group decision-making?
Group decision-making is generally more accurate than individual decision-making.
What type of problems are commonly used to compare individual and group performance?
Eureka-type problems
According to Laughlin's findings, who generated the highest proportions of correct hypotheses in eureka-type problems?
The best individual participants
Which group decision technique involves members providing estimates anonymously in a series of rounds, with no face-to-face discussion, until a consensus is reached?
Delphi
According to the results, which group decision technique led to the greatest improvement in judgment accuracy?
Dictator
In the lens model framework for group judgment, what does the far-right represent?
Consensus group judgment
According to the lens model framework, what is the advantage of using this framework for analyzing judgmental accuracy?
It allows for statistical analysis of judgmental accuracy
What are the three factors examined by the Good Judgment Project team in order to get the best out of forecasts?
Training, Teaming, Tracking
What is one way in which a cue can exert a direct influence on group judgments, as mentioned in the text?
Unshared cue
What is consistent in both intellective and judgmental tasks when it comes to group performance?
Importance of identifying the best individual member
What did Henry show about groups' ability to identify the best member in a group?
Groups were able to identify the best member at levels far exceeding chance
Which of the following is NOT a key quality of super forecasters?
They have superior communication skills
What are the antecedent conditions of groupthink according to Janis' model?
Cohesiveness, insularity, directed leadership, lack of procedures for search and appraisal of information, low confidence in finding an alternative solution
What is groupthink?
The type of decision-making that occurs in groups that are highly cohesive, insular, and have directed leadership
Which of the following is NOT one of the steps in the five-step methodology for adopting the outside view?
Assess the reliability of your prediction
What is the main advantage of considering the opposite as a decision-making technique?
It improves judgmental accuracy
What is one example of a result of considering the opposite?
Reduction of the anchoring effect
According to Yates et al, why are decision-support systems more successful than other decision-aiding tools?
Because they emphasize improving outcomes
What is an example of choice architecture mentioned in the text?
Opt-in or opt-out
According to Johnson and Goldstein, how does the choice architecture impact consent rates for being a donor?
When one needs to act due to non-conductive choice architecture, consent rates are much lower
Which technique can help overcome the tendency to only consider a narrow sample of evidence and improve judgment?
The Five-whys technique
What is the purpose of the Multi-Attribute Utility Measure (MAU)?
To aggregate the value-laden attributes of decisions
Which type of decision support system component performs operations on retrieved data that are often more complicated than a decision maker alone could perform?
Model component
Why do decision-makers on the web tend to prefer non-compensatory sites?
They focus on alternatives
What is the most commonly cited reason for excluding testimony from eyewitness experts, according to courts in the USA?
Eyewitness memory is common sense to jurors.
What does the research on eyewitness behavior show about lay knowledge of eyewitness memory?
It is limited in scope and highly inaccurate.
What factors do jurors tend to underestimate and overestimate in terms of their influence on the accuracy of eyewitness memory?
They underestimate the importance of system variables and overestimate the importance of estimator variables.
What groups exhibited a greater lack of correspondence between their knowledge and that of the experts?
Jurors
Which variables were groups found to be more accurate in their response concerning?
System variables
What does the solution to closing the knowledge gap about eyewitness issues in the courtroom potentially lie in?
Focusing on the importance of system variables
What is the focus of the article on the psychology of confessions?
The focus of the article is on a second psychologically based problem: that innocent defendants had confessed before their trial.
What are the three objectives of the article?
The three objectives of the article are: 1) Update on the psychology of confession evidence 2) Isolate and amplify a surprising signal that innocent may put innocent people at risk during a criminal investigation 3) Propose that policies for the reform of interrogation practices and the mandatory videotaping of all interviews and interrogations offer the most effective means of protection.
What is the error with the pre-interrogation interview Reid technique?
The error is that there are different reasons why 'deception' behavior is shown and research has failed to support the claim that groups of individuals can attain high-average levels of performance in judgments of truth and deception.
What are the potential problems associated with interrogation and the criminal justice system?
- Innocent people are often targeted for interrogation based on erroneous judgments. 2) Innocents waive their rights to silence and counsel. 3) Innocents can be induced to confess to crimes they did not commit. 4) It is difficult to recognize a false confession.
What are some proposals for reforming interrogation practices?
- Set guidelines for the amount of time a suspect can be detained and questioned. 2) Avoid using fake evidence. 3) Further study and avoid the use of minimization tactics. 4) Video-tape interrogations.
What does the study suggest about the protection of innocence within the criminal justice system?
The study suggests that there is insufficient protection for innocence within the criminal justice system and that innocence may put innocents at risk.
What are the mixed results of forensic studies on the accuracy of police judgments in detecting lies?
Some suggest that police can sometimes make accurate judgments, while others suggest that they are not necessarily more accurate.
What were the two unique aspects of the study on judgment accuracy in a forensic context?
- Some participants received training in the Reid technique while others did not. 2) Judgments were made for a set of videotapes depicting interviews and denials by guilty or innocent individuals.
What were the results of the study on judgment accuracy in a forensic context?
Observers were generally unable to differentiate between suspects better than chance. Participants who received training were less accurate than naïve controls, although they were more confident and cited more reasons for their judgments.
What is a reasonable goal in improving police interviewers and lie detectors?
To seek future improvements in training to make police better interviewers and lie detectors.
Describe three mechanisms through which economic evaluation can assist psychiatry in mental health care.
The three mechanisms through which economic evaluation can assist psychiatry in mental health care are: 1) Describing the cost of the burden of psychiatric illness, 2) Predicting the level of resources needed in psychiatry, and 3) Providing information about the best use of those resources.
What are the different types of costs considered in cost studies related to mental illness?
The different types of costs considered in cost studies related to mental illness are: direct costs, indirect costs, and intangible costs.
What do healthcare costs in mental health care describe?
Healthcare costs in mental health care describe the resources consumed by health care interventions, which can be aimed at either prevention or treatment.
What are the three levels of resources that contribute to maximum savings in healthcare?
- Healthcare resources, 2) Patient and family resources, 3) Other sector resources
What are the two forms of other value in healthcare?
- Direct value to the patient of his or her improved health state, 2) Value of being reassured that he or she is receiving appropriate care
What are utilities in the context of healthcare?
Utilities provide preferences for a health state and refer to establishing weighted index of preferences on a scale from 0 to 1
What is the difference between Quality-adjusted life years (QALY's) and Disability-adjusted life years (DALY)?
QALY's measure utilities that exist over time, while DALY combines expected length of life lost due to premature mortality with the severity-adjusted future stream of a life lived with a disability
What is the goal of economic evaluation in healthcare service provision?
The goal of economic evaluation in healthcare service provision is to compare the worth of a program when compared with other programs through the comparison of costs with benefits.
What is the impact of increasing demand for psychiatric services on psychiatrists?
Increasing demand for psychiatric services will ensure that psychiatrists are held accountable for their programs and they will be expected to undertake comprehensive evaluations, including economic evaluation, to compare their programs with other health-care interventions.
What has been the reported quality of most economic evaluations of psychiatric services in the past?
Most economic evaluations of psychiatric services in the past were reported to be methodologically poor.
What are the main reasons for poor quality economic evaluations of psychiatric services?
The main reasons for poor quality economic evaluations of psychiatric services include measurement difficulties, poor understanding of economic evaluation, a failure to work closely with health economists, and a failure to adhere to the basic principles of economic evaluation.
What are the essential elements of Shared Decision Making (SDM)?
The essential elements of SDM are: 1) Define or explain the problem, 2) Present options, 3) Discuss the pros and cons, 4) Assess patient's values or preferences, 5) Discuss patient ability or self-efficacy, 6) Provide doctor knowledge or recommendations, 7) Check or clarify understanding, 8) Make or explicitly defer decisions, 9) Arrange follow-up.
What is the four-step model of SDM proposed by the authors?
The four-step model of SDM proposed by the authors includes: 1) The professional informs the patient that a decision is to be made and that the patient’s opinion is important, 2) The professional explains the options and the pros/cons of each relevant option, 3) The professional and patient discuss the patient’s preferences; the professional supports the patient in deliberation, 4) The professional and patient discuss the patient’s decisional role preference, make or defer the decision, and discuss possible follow-up.
What are some suggestions to improve the implementation of SDM?
Some suggestions to improve the implementation of SDM include: 1) Implement the Ask 3 questions approach, 2) Use patient decision aids tools, 3) Include other professionals than physicians (e.g. nurses), 4) Incorporate SDM in medical and nursing curricula, 5) Raise knowledge and awareness about SDM.
What is the main barrier to implementing SDM in clinical practice, according to clinicians?
Clinicians think it takes a lot of time to implement SDM, but data suggests otherwise.
What is shared decision making (SDM) and how does it distinguish from other models?
Shared decision making (SDM) is a two-way exchange of information and treatment preferences between patients and physicians. It distinguishes from other models by acknowledging that patients' treatment preferences vary widely, are often different from physicians' preferences, and cannot be adequately predicted by patient characteristics. In SDM, patients and physicians agree on the final treatment decision, which may not be the physician's preferred option.
What are the two lines of thinking that support the plea for SDM?
The two lines of thinking that support the plea for SDM are ethics and practice variation.
What is the goal of shared decision making (SDM) in terms of the final treatment decision?
The goal of shared decision making (SDM) is for patients and physicians to agree on the final treatment decision, which may not be the physician's preferred option.
What are the two lines of thinking that support the plea for shared decision making?
Ethics and practice variation
What distinguishes shared decision making (SDM) from other models?
Two-way exchange of information and treatment preferences
In shared decision making (SDM), what is the final treatment decision based on?
Agreement between patients and physicians
What are the essential elements of Shared Decision Making (SDM) identified by Makoul and Claymen?
The essential elements of SDM identified by Makoul and Claymen are: 1) Define or explain the problem, 2) Present options, 3) Discuss pros and cons, 4) Assess patients values or preferences, 5) Discuss patient ability or self-efficacy, 6) Provide doctor knowledge or recommendations, 7) Check or clarify understanding, 8) Make or explicitly defer decisions, 9) Arrange follow-up.
What are the steps in the four-step model of SDM proposed by the authors?
The steps in the four-step model of SDM proposed by the authors are: 1) The professional informs the patient that a decision is to be made and that the patient’s opinion is important, 2) The professional explains the options and the pros/cons of each relevant option, 3) The professional and patient discuss the patient’s preferences; the professional supports the patient in deliberation, 4) The professional and patient discuss the patient’s decisional role preference, make or defer the decision and discuss possible follow-up.
Are the four SDM steps implemented in clinical practice?
The four SDM steps are seen to a limited extent only in daily clinical practice.
What are some suggestions to improve the implementation of SDM?
Some suggestions to improve the implementation of SDM include: 1) Implementing the Ask 3 questions approach to encourage patients to ask questions, 2) Using patient decision aids tools to support patients in the SDM process, 3) Involving other professionals, such as nurses, in discussing options, 4) Incorporating SDM in medical and nursing curricula, 5) Raising knowledge and awareness about SDM among professionals and patients.
Study Notes
Decision Making Research
- The quality of good decisions and bad decisions are related, but participants rate the importance of their bad decisions higher than their good decisions.
- Good decisions are coded as good and bad decisions are coded as bad based on their outcomes.
Decision vs Judgment Research
- The main difference between decision research and judgment research is the focus of study, with decision research focusing on the outcome of the decision and judgment research focusing on the process of judgment.
Herbert Simon's Proposal
- Herbert Simon proposed that human behavior should be assessed in terms of bounded rationality, considering the cognitive limitations of humans.
Expected Utility Theory
- Bernoulli replaced the notion of expected value with expected utility.
- One of the axioms of expected utility theory is that preferences should be transitive.
- One of the factors that affect the quality of a decision is the context in which it is made.
Biases and Heuristics
- The positive retrospect bias suggests that people tend to remember good decisions as better than they actually were.
- Social judgment theorists use the lens model as a tool.
- Savage proved that a person's choices can be inconsistent with expected utility theory.
- One of the psychological caveats incorporated into expected utility theory is the notion of loss aversion.
- Evidence of human behavior contradicting expected utility theory led to the development of alternative theories, such as prospect theory.
Judgment and Decision-Making
- The left-hand side of the lens model represents the cue-outcome relationships.
- The principal technique used in learning novel cue-outcome relations is the take-the-best (TTB) strategy.
- The expert in a mechanical combination plays the role of integrating cue values to make a prediction.
- Gigerenzer's adaptive toolbox proposes that humans use fast-and-frugal heuristics to make decisions.
- The two principles of the TTB strategy are that it selects cues in the order of their validity and stops searching for cues when the best cue is found.
Consumer Behavior
- According to McClelland and Lange, decision-making is difficult for consumers because of the complexity of the decision environment.
- The main difference between compensatory and non-compensatory strategies in decision-making is that compensatory strategies weigh the pros and cons of each option, while non-compensatory strategies do not.
- A simple statistical model can outperform human predictions because it is not biased and can process large amounts of data.
Cognitive Feedback and Outcome Feedback
- Klayman's experiment showed that participants had difficulty predicting outcomes.
- Participants under-purchased good reports in the study on setting production quotas because they were uncertain about the quality of the reports.
- Payne, Bettman & Johnson (1993) proposed that the trade-off involved in deciding how to decide is between the accuracy of the decision and the time and effort required.
Monitoring and Control
- The key process in decision-making is monitoring and control.
- According to Osman, the monitoring component of the Monitoring and Control (MC) framework involves tracking the environment and the effects of one's actions.
- The central notion in the MC framework is that humans learn and adapt through feedback.
Probability Theory
- The conjunction fallacy occurs when people rate the conjunction of two events as more probable than one of the events.
- Bayes' rule provides a normative rule for updating probabilities based on new evidence.
- The likelihood ratio compares the likelihood of one hypothesis to the likelihood of another hypothesis in Bayesian updating.
- Bayes' rule tells us how much to adjust our prior probabilities based on new evidence.
Bayesian Networks
- Bayesian Networks are particularly useful in situations where multiple interrelated variables are involved.
- One of the advantages of using Bayesian Networks for probabilistic reasoning with multiple interrelated variables is that they can represent complex relationships between variables.
Attribute Substitution
- Attribute substitution occurs when people use a heuristic to substitute a difficult attribute with a more accessible one.
- Base-rate neglect occurs when people ignore the base rate of an event when making judgments.
- The availability heuristic is based on the ease with which examples come to mind.
- The conjunction fallacy occurs when people rate the conjunction of two events as more probable than one of the events.
Judgment and Uncertainty
- People make conjunction errors because they ignore the possibility of one event not occurring.
- The main difference between the inside view and the outside view is that the inside view focuses on the characteristics of the problem, while the outside view focuses on the characteristics of the reference class.
Nested-Sets Hypothesis
- The nested-sets hypothesis proposes that people categorize objects based on their similarity to a central exemplar.
- The frequency effect describes the tendency for people to overestimate the importance of rare events.
- Gigerenzer and colleagues proposed that natural frequencies are more intuitive and easier to understand than probabilities.
Decision Analysis
- The core ingredients for any decision problem are the options, the criteria, and the weights.
- The second step in analyzing decisions is to identify the relevant options and criteria.
- The rule that takes one from the specifications to the correct decision is the decision rule.
Expected Utility Theory and Prospect Theory
- Expected utility theory proposes that people make decisions based on the expected utility of each option.
- One of the basic axioms of expected utility theory is that preferences should be transitive.
- The Allais paradox is a challenge to expected utility theory, as people prefer option A over option B.
- Prospect theory proposes that people evaluate outcomes relative to a reference point, rather than in absolute terms.
Test your knowledge on decision-making with this quiz! Explore the impact of good and bad decisions, their perceived importance, and recall abilities. Discover insights from Yates et al's research and gain a deeper understanding of decision-making processes. Challenge yourself and enhance your decision-making skills!
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