Download Irrationality and Decision Making: Effects of Preference, Framing, and Heuristics - Prof. and more Study notes Psychology in PDF only on Docsity! Irrationality - effects of how you measure preference o how you make your choice shouldn’t matter o You always should prefer ‘A’ rationally - A: 8 in 9 chances to win $4 - B: 1 in 9 chance to win $40 o Which would you pick? o What’s the lowest price at which you would sell the chance to play this game? - Eliciting Preference o On jury of only child sole custody case after divorce o Base judgment on: Parent A: Avg Income, health, work habits, reasonable rapport, and relatively stable social life B: Above Avg. Income, minor health problems, lots of work related travel, close relationship with child, extremely active social life People choose B for both granting and denying the parent custody of the child - Framing: o I give you $100 and you must choose A: 50% chance of winning $200 and 50% chance of winning 0% B: 100% of receiving $100 people go for the risk of averse gains o I give $300 A: 50% of losing 200 or winning 0 Risk seeking for losses B: Losing 100 for sure - Sunk Cost o Time, money, or investment that is irretrievably spent, and shouldn’t affect current decision making yet it does - Summary o Foregoing material shows us that people don’t always behave rationally o Fact implies that some principle other than expected utility guides peoples choices - Heuristics o Simple cognitive rule that is easy to apply and usually leads to acceptable answers, but can also lead to errors Representativeness Availability Anchoring and adjustment Simulation - Representativeness o Used when you are asked to judge the probability of an event. Representativeness leads you to judge that an event is likely to belong to a category if the event either has the features of the category that you strongly associate with that category, or if it has features that you associate with the process that generates examples of the category. o Randomness is the process that generates coin tosses o Linda is 31 years old, single, outspoken and very bright. Majored in philosophy. As a student she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations. People choose between: She is a bank teller, and She is a bank teller and is active in the feminist movement People think she is a feminist and bank teller because they strongly associate her features with a feminist That is more wrong than the first choice - Availability o Used to judge probability of wevents o You use availability by trying to call to mind ecaples: the more examples you think of, the more probably you judge the event o Are there more words with R as the first letter or with with R as the third letter? People say first, because they start thinking of words that have R as the first letter o More likely cause of death: Airplane or car crash? People believe airplanes are worse, but cars are far worse Diabetes or Homicide? Diabetes more likely o Implication: Portrayal of racial and ethnic groups on TV and movies; e.g. African Americans over-represented as criminals on TV; availability heuristic suggests what you’ll believe - Anchoring and Adjustment o Used to estimate probabilities o To use it you do a quick estimate based on memory, or on info provided in the problem and then adjust the estimate o Giving you a price of something and saying you’ll pay this much less for it - Simulation o Mental construction or imagining of outcomes – used to evaluate past outcomes, which may influence future decisions
