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Chapter 11

PSYCH 338 Chapter Notes - Chapter 11: Bounded Rationality, Confirmation Bias, Satisficing


Department
Psychology
Course Code
PSYCH 338
Professor
Doug Brown
Chapter
11

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Chapter 11- Decision Making
What is Decision Making?
Decision Making the process of developing a commitment to some course of action
Problem a perceived gap b/w an existing state and a desired state
Types of Problems:
Well-Structured Problem a problem for which the existing state is clear, the desired state is clear,
and how to get from one state to the other is fairly obvious
o Program a standardized way of solving a problem
Rules
Routines
Standard operating procedures
Rules of Thumb
Ill Structured Problem a problem for which the existing and desired states are unclear and the
method of getting to the desired state is unknown
The Compleat Decision Maker A Rational Decision-Making Model:
Perfect vs. Bounded Rationality:
Perfect Rationality a decision strategy that is completely informed, perfectly logical, and oriented
toward economic gain
Bounded Rationality a decision strategy that relies on limited information and that reflects time
constraints and political considerations
Framing aspects of the presentations of information about a problem that are assumed by decision
makers
Cognitive Biases tendencies to acquire and process information in and error-prone way
Information Search:
Confirmation Bias the tedecy to seek out iforatio that cofors to oe’s own definition of
solution to a problem
Information Overload the reception of more information than is necessary to make effective
decisions
Maximization the choice of the decision alternative with the greatest expected value
Anchoring Effect the inadequate adjustment of subsequent estimates from an initial estimate that
serves as an anchor
Satisficing establishing an adequate level of acceptability for a solution to a problem and then
screening solutions until one that exceeds this level is found
Solution Implementation:
Sunk Costs permanent losses of resources incurred as the result of a decision
Escalation of Commitment the tendency to invest additional resources in an apparently failing
course of action
Hindsight the tendency to review the decision making process to find what was done right or wrong
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