PSYCH 1100 Lecture Notes - Lecture 47: Sunk Costs, Representativeness Heuristic, Fallacy

• School: Ohio State University
• Department: Psychology
• Course: PSYCH 1100
• Professor: Brian Siefke

Document Summary

Lecture 47: decision making: rational and otherwise. Economists contend that id we are rational and are free to make our own decisions, we will behave as predicted by rational choice theory: Rational choice theory- we make decisions by determining how likely something is to happen, judging the value of the outcome, and then multiplying the two. Studies have shown that people are quite good at estimating frequency, or simply the number of times something will happen. In contrast, we perform poorly on tasks that require us to think in terms of probabilities, or the likelihood that something will happen. Items that are more readily available in memory are judged or having occurred more frequently. Shortcuts such as the availability bias are sometimes referred to as heuristics: fast and efficient strategies that may facilitate decision making but do not guarantee that a solution will be reached.