PSY BEH 11B Lecture Notes - Lecture 4: Loss Aversion, Base Rate, Affective Forecasting
12 Jul 2018
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-- DECISION MAKING 4 --
4 common heuristics that bias decision making:
1) Relative comparisons (anchoring and framing)
❏People often use comparisons to judge value
❏Feeling better when getting an 85 and finding out the class avg was 75
❏Being influenced by anchoring and framing
❏Anchor → reference point in decision making
❏Occurs when, in making judgments, people rely on 1st piece of info they
encounter or on info that comes most quickly to mind
❏Asking how many # residents in chicago depends on wording:
❏< 200,00 vs < 5,000,000
❏After making an initial judgment based on an anchor, people compare subsequent
info to that anchor and adjust away from the anchor until they reach a point
where the info seems reasonable
❏Framing → tendency to emphasize potential losses/gains from at least one alternative in
decision making
❏When people make choices, they may weigh losses and gains differently
❏Generally much more concerned with costs than benefits, aka loss aversion
❏Losses weigh more heavily than gains
2) Availability → general tendency to make a decision based on the answer that comes most
easily to mind (relying on info thats easiest to retrieve)
❏Recalling list of names day after presented to them and easily recalling celeb names
❏Info readily available biases decision making
3) Representativeness → tendency to place a person or object in a category if the person or
object is similar to our prototype in a category
❏Used then we base a decision on the extent to which each option reflects what we already
believe about a situation
❏Helena’s characteristics seem more like a cog psych than postal worker
❏Can lead to faulty thinking if we fail to take other info into account
❏Base rate → how frequently an event occurs
❏What people pay insufficient attention to b/c they focus more on whether
the info is representative of one conclusion or another
❏More postal workers then cog psych, maybe helena = post worker
4) Affective forecasting → tendency to overestimate how events will make them feel in the
future
❏Making sense of an event helps reduce its negative emotional consequences
❏After a negative event, people engage in strategies that will help them feel better
Document Summary
4 co(cid:304)(cid:304)o(cid:305) heuristics that bias decisio(cid:305) (cid:304)aki(cid:305)g: relative comparisons (anchoring and framing) People often use comparisons to judge value. Feeling better when getting an 85 and finding out the class avg was 75. Anchor reference point in decision making. Occurs when, in making judgments, people rely on 1st piece of info they encounter or on info that comes most quickly to mind. Asking how many # residents in chicago depends on wording: After making an initial judgment based on an anchor, people compare subsequent info to that anchor and adjust away from the anchor until they reach a point where the info seems reasonable. Framing tendency to emphasize potential losses/gains from at least one alternative in decision making. When people make choices, they may weigh losses and gains differently. Generally much more concerned with costs than benefits, aka loss aversion.
