Psychology 3130A/B Lecture Notes - Lecture 9: Status Quo Bias, Life Insurance, Risk Aversion

33 views3 pages
Lesson 9 Decision Making
Decision Making
- What is decision making
o Reducing uncertainty
Bc uncertainty causes anxiety
o Max. outcome
- Theories of decision making
- Decision errors and biases
Basic Framework (go through explicitly or implicity)
- Identification
o Recognition decision needs to be made
o Framing of decision
Semantics and linguistic factors can influence what appears to be the best
Really important…e.g. is it on sale, can influence decision
- Generation
o Generation of possible decision alternatives is affected by
Individual effects
Cognitive biases (reduced memory work capacity for e.g.)
Env biases (cost of making error)
- Evaluation
o Decision alternative are generated, decision-market evaluates them
Probabilities
Of the outcomes, so some decisions riskless others risky
Consequences
Costs, risks, benefits
Risks/benefits
- Selection (decision)
o Selection of decision alternative can have immediate consequences (or not)
o Once a decision is made, decision maker can engage in
Re-evaluation
Re-framing
Regeneration
Action
Check outcome
Difficulties
- Many decision are carried out with no difficultly
o Often problems occur though (things that affect some decision making errors later talk about)
- Conflict
o Make tradeoffs (gas mileage vs car power)
- Uncertainty
o Outcome of decision often depends on uncertain variables or events
Like future demand for product, time to complete something
Theories
- Psychologists have attempted to describe and explained decision making within the context of several
theoretical frameworks
- Rational/normative model
o Expected value, expected utility
- Prospect theory
Rational Decisions
- Rational model sets standard
o Based in expected value/utility
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows page 1 of the document.
Unlock all 3 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
Monthly
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.