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Lecture 17

ECON 2023 Lecture Notes - Lecture 17: Cognitive Bias, Fallacy, Hindsight BiasPremium

3 pages63 viewsFall 2016

Course Code
ECON 2023
Jeff Cooperstein

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Brain Modularity
-Specific areas deal w. specific sensations, activities, emotions
-=Modern human brain
-Oldest parts of brain=in back of head
Older parts= Subconscious activities
-Breathing, sweating, automatic emotional reactions
-Newest parts= in front (near forehead)
Newer parts= Conscious control
-Think creatively, imagine future, keep track of everyone in social network
-System 1 & System 2
-Brain’s decision-making systems= 2 categories
System 1
-Use a lot of heuristics in older parts of brain
-Produce quick, unconscious reactions
-E.g.) “gut instinct”
System 2
-Use newer parts of brain
-Undertake slow, deliberate, conscious calculations of costs & benefits
-E.g.) Thinking things over
-Conflicts btw System 1 & 2 sometimes occur
-Unconscious mental processes suffer from variety of cognitive biases
-Cognitive bias
-Misperceptions/ misunderstandings causing systematic errors
-2 categories
(1) Mental-processing errors result from faulty heuristics
-(Faulty heuristics= result of trade off accuracy for speed & efficiency)
(2) Mental-processing errors result from brain not having any evolved capacities
-For dealing w. modern problems & challenges
-Total absence of System 1 for modern problems
-E.g.) Solving calculus problem
-System 2= limited assistance
-Supposed to deal w. other types of problems
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