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Psych 207 CHAPTER 11

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Jennifer Stolz

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CHAPTER 11 – JUDGEMENT AND DECISION MAKING JDM EXAMPLES: 1. People tend to make an estimate, and then revise it upward because of cost factors, an example of the anchoring and adjusting heuristic. The ratio is 5:1. - Anchoring effect - You’re making an initial judgment 2. Graduate School – First born children are more likely to have graduate school st nd - How many 1 born vs. 2 born people are there? Base rate - Every family has their first born child 3. Why most fire starts in the first 10 floors of a hotel? - How many hotels have a 2 10 floors? 4. Fair toss coins - The Gambler’s Fallacy is that the next toss will come up tails. The law of large vs. small numbers. - The larger the sample the more that sample will mimic the general distribution - It doesn’t matter how many times a tail will appear, the next toss will still be a 50-50 instance Sources of Decision dfiiculty 1. Conflict – decision maker must make tradeoffs across different dimensions (e.g., car’s power vs. gas mileage; TV’s price quality; spending time at work vs. with family) 2. Uncertainty - outcome of decision often depends on uncertain variables or events (e.g., future demand for a product; completion time). Real word decision making *When somebody is familiar to you, you tend to overestimate the likelihood of something. * The man has a heart attack – the correct answer; usually not chosen because ignoring base rate information; other options are subgroups Heuristics in Decision Making  Illusory correlation – twisting of hair has no correlation with stress  Framing - People used to choose Station A; (when the words discount, bonus and etc are just the same prices than the original.  Confirmation Bias: Wason 2-4-6 (if you like to major psychology, and ask them, you’re gonna get the best or worst informa
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