MAR 4503 Lecture Notes - Lecture 8: Affect Heuristic, Decision-Making, Prospect Theory
Document Summary
Choose an option that will give us the highest utility. Difference between a judgement and a choice: in choice you have an option to choose, and judgement is a classification. People don"t focus on data, but in how they feel. It can also be used to judge quality. Start an estimate at an initial value (anchor) and then adjust accordingly. It is used in pricing (publix vs. whole foods), negotiations, The way in which the option is placed, like framing, can influence the final outcome. Nudging: subtle changes in the environment that can alter perception. The way a choice is out into context. Describing the same option in different ways lead to different preferences.