PSYC 251 Chapter Notes - Chapter 14: Risk-Seeking, Prospect Theory, Loss Aversion
1 Apr 2017
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Psyc 251 - chapter 14: decision making: decision making a vast range of decisions, each with different: timescales (milliseconds vs. days) (i) (ii) importance (minor vs. major) (iii) topic (navigation, sustenance, relationship, time management) Must select which options, out of all the ones available to us: evaluate what all the possible options are, determine the outcomes & how likely they are, consider what we value. Choices consequently de ne who we are & how we interact w/ the world: prescriptive approach: rational choice how people should decide. (i. e. as you get more & more of something, the less its subjective utility increases) Differs according to individual differences: loss aversion: losing feels worse than winning that equivalent amount. Individual differences in sensitivity to loss: utility function: displays diminishing marginal utility & loss aversion, in relation to objective value & subjective utility. Low probability of a loss risk averse. Low probability of a gain risk seeking.
