Decision Making Basics
This is when a person assesses information and chooses between two or more alternatives.
What is decision making?
This heuristic is used when people judge something based on how similar it is to a typical example.
What is the representativeness heuristic?
This heuristic is used when people estimate probability based on how easily examples come to mind.
What is the availability heuristic?
This heuristic happens when people start with an initial number and adjust from there.
What is anchoring and adjustment?
This bias is known as the “I knew it all along” effect.
What is hindsight bias?
These are general strategies that usually work well but can sometimes lead to mistakes.
What are heuristics?
This fallacy happens when people ignore how often something actually occurs in the population.
What is the base rate fallacy?
Recent news stories can make events seem more common because of this factor.
What is recency?
This effect occurs when the wording or background context of a choice changes the decision.
What is the framing effect?
This bias happens when people are overconfident that their own view is correct.
What is myside bias?
These two researchers studied how decision-making shortcuts can sometimes lead people astray.
Who are Tversky and Kahneman?
This fallacy happens when people think two events together are more likely than one event alone.
What is the conjunction fallacy?
This occurs when people believe two variables are related even though there is no real evidence.
What is illusory correlation?
This theory explains that people think differently about possible gains compared to possible losses.
What is prospect theory?
These decision makers examine many options, which can sometimes lead to choice overload.
What are maximizers?