Psychology 3190F/G Lecture Notes - Fallacy, Satisficing, Hindsight Bias

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Focused thinking is a process from moving to the current state to the goal state. Always make the best choice -> given a set of outcomes we should choose the highest value. Make the best choice regardless of how the alternatives are described (the best choice is the best choice no matter how the choices are phrased) Rational or normative model -> humans are capable of estimating the objective probability of each outcome, and choose the one which is optimal, says we are perfect at estimating probability. Prospect theory: probability that people estimate is psychological or subjective, says we are not perfect at estimating probability. People set a value for all the alternative and choose the most valuable. A: winning with probability 0. 10 / else nothing = . B: winning with probability 0. 90 / else nothing = . 20. Winning with probability 0. 80: ev= . Winning with probability 1. 00: ev = .

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