Psychology 3130A/B Lecture Notes - Lecture 9: Decision-Making, Prospect Theory, Iges

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Identification recognition of the decision that needs to be made: framing of decision, semantics and linguistics factors can influence what appears to be the best option (something on sale) Evaluation of alternatives: evaluating all of the, probabilities, consequences, risk/benefit. Selection selection of a decision alternative can have immediate consequences (or not: after selection, the decision maker can engage in, re-evaluation, re-framing, regeneration, action, check the outcome. Conflict decision maker must make trade-offs across different dimensions. Uncertainty outcome of decision often depends on uncertain variables or events. Rational/normative model based in economic theory: sets the standard. It is weighing the alternatives and making an appropriate decision. Prospect theory: objective probability is replaced by psychological probability, the psychological value people put on gains plateaus whereas the loss. Violations many decisions show predictable violations and deviations from rationality curve drops suddenly and is steep.

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