PSYC 101 Lecture Notes - Lecture 36: Decision-Making, Optimism Bias, Prospect Theory

• School: UBC
• Department: Psychology
• Course: PSYC 101
• Professor: Steven Barnes, Grace Truong

Document Summary

Decisions made on basis of investment in the past. Ppl believe that relative to other ppl, they are more likely to experience positive events. Believe they are more likely to own a house and live a long life. Believe they are less likely to suffer from a heart attack. Good for mental health but detrimental for success. Stronger in na than in some eastern cultures. We should make decisions that max expected utility but we don"t. Not focused on outcome or expected utility. We take risks when assessing losses and avoid risks when evaluating gains. Prospect that is believed to offer best value is chosen. 80% chance of winning 4000 or 100% of receiving 3000. 400 monthly rent for apartment a is discounted 10 if you pay before the 5th of the month. 10 surcharge is tacked onto the 390 per month rent for apartment b if you pay after the 5th of the month.