Psychology 3130A/B Chapter Notes - Chapter 9: Satisficing, Risotto, Diminishing Returns

• School: Western University
• Department: Psychology
• Course: Psychology 3130A/B
• Professor: John Paul Minda

Document Summary

Ev = (value gain x probability(desired outcome)) (value loss x. Win with a probability of 0. 2 or else nothing. Ev = ( x 0. 2) (sh x 0. 8: outcome has additional utility beyond the actual value. Increases value of a win, decreases cost for a loss. Additional psychological utility that comes from a casino game ie. part of a vacation so it minimizes the impact of a loss. Biases and problems with the rational approach: very effective at describing the optimal decision-making patterns, but fails to describe how people actually make decisions, certainty effect. Bias for certainty occurs when people choose an option with a lower expected value that promises certainty instead: framing effect. Illustration about how the context and semantics of a decision can affect which options seem preferable. When framed as a saving or as a gain, people display risk averse behaviour and prefer a certain outcome.