PSYCH 4508 Study Guide - Midterm Guide: Anchoring, Time Preference, Duration Neglect
24 Sep 2016
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Ideal standards for what is rational (used as benchmarks: descriptive theories. Often compared to normative standards: prescriptive theories. What procedures can we use: controlled vs. automatic processes. To conserve cognitive resources, we offload much of our processing to our mental autopilot : bounded rationality. People try to approximate optimal behaviors and decisions. However, people also deviate from optimal decisions because of the limitations of short term memory impose limits on the amount of information we can use at once. Might be why people do not always choose rationally. We often use shortcuts or heuristics when making decisions. Decision making and expected value: criteria for rationality. Choices should be based on the decision maker"s current assets. Decisions should be based on all possible outcomes of the choice and how good or bad those outcomes would be. When outcomes are uncertain, their likelihoods should be considered; likelihood estimates should follow the rules of probability theory.
