01:830:305 Lecture Notes - Lecture 1: Expected Utility Hypothesis, Deductive Reasoning, Syllogism
25 Jan 2017
School
Department
Course
Professor
Document Summary
Decision making part ii: utility, outcomes that are desirable because they are in the person"s best interest, expected utility theory. Assumes people are basically rational: but in reality, people are not, use all relevant and available information. Studied first in economics, monetary pay off over time: advantage. Procedures exist to calculate best, rational answer: problems. Choose safer route: emotions, current emotions, expected emotions. But still influence decision making: risk aversion, tendency to avoid taking risks. Even if risky choice has high utility: more likely to take safe, sure choice, when decision is framed in terms of gains, risk taking. When decision is framed in terms of losses: framing, what affects decisions, how choices are presented. Opt-in vs opt-out: people are more likely to stay in current situation that may change the status quo, wording. Both choice may have same utility: choices were same, just worded differently.
