Biases and Falsification
What is Confirmation Bias?
People's tendency to generate and evaluate evidence and test their hypotheses in a way that biased toward their own opinions and attitudes
Emotions _________ decision-making, but often ___________.
accelerate; irrationally
What is "On Tilt"
“Frustrated Anger” emotions lead individuals to choose high risk/high reward lotto tickets
What are Framing Effects?
When gains are emphasized, people often make risk-averse decisions
When losses are emphasized, people often make risk-taking decisions
What is the Status Quo Bias?
The tendency to do nothing when faced with making a decision
What is the Falsification Principle? Do people use this often?
For a theory to be scientific, it must be able to be tested and conceivably proven false. To test a rule, it is necessary to look for situations that would falsify the rule
People tend to look for evidence that confirms their hypotheses rather than looking for evidence that would disconfirm their hypothesis
What is Affective Forecasting?
Predicting one’s emotional state in the future
Describe the Ultimatum Game and how humans play it versus computers.
I Proposer, I Responder: two players (human and computer) decide how to divide a sum of money
Humans are less likely to accept unfair distributions of the money (eg, $1 and $9 vs $5 and $5)
Why do framing Effects occur?
Loss Aversion
Status Quo Bias
What is the Expected Utility Theory
People are rational and want to maximize “utility” (i.e., outcomes that achieve your goal)
How good are college students at predicting how happy they'll be in a desirable vs an undesirable dorm?
What is Loss Aversion?
People experience about twice as much pain with loss as they experience pleasure from a similar sized gain (eg, more pain from losing $10 than gaining $10)
People would rather take the ____ _____, than risk losing it (even if the risk is the better bet)
sure gain
What are Opt-In vs Opt-Out Procedures and how does this effect organ donation?
Opt-In: Requires the person to take an active step to be included
Leads to less people on the organ donor list
Opt-Out: Everyone is automatically included unless they take an active step to get out
Leads to more people on the organ donor list
How are Expected Values calculated?
EV = sum (probability x utility)
Ex: Bet $10 for heads, so $0 for tails
- 1($10 x 0.5) + 1($0 x 0.5) = $5 (EV)
What is Focalism and why does is make us bad at Affective Forecasting?
The tendency to overestimate how much we will think about the event in the future and to underestimate the extent to which other events will influence our thoughts and feelings (failure to take into account other things that will impact happiness)
A game has 20 rounds, start with $20. Each round decide if you want to bet $1. If a coin flip came up heads, you lose $1. If the coin came up tails, you win $1.50.
Based on the Expected Utility Theory, what should participants do?
Always bet
EV: (0.5 x -$1) + (0.5 x $1.50) = 0.25
People would rather have the chance to have _____ loss over __________ loss (even if will most likely lead to bigger loss)
no; guaranteed
What is Omission Bias?
A preference for risking harm through inaction compared to risking harm through action even when there is a greater risk of harm by inaction
People can be really ___ at estimating and understanding probabilities
bad
What is Ignorance of Sense-Making and why does is make us bad at Affective Forecasting?
We readily explain novel or unexpected events once they happen, which reduces the impact (justifying events as they happen doesn't account for previous estimates of emotion)
In a game that has 20 rounds where people start with $20--each round deciding if they want to bet $1 for -$1 on heads or +$1.50 on tails)--what would the following people do:
Risk Averse, Risk Neutral, and Risk Positive
Risk Averse: less likely to bet
Risk Neutral: more likely to make decisions that maximized utility and bet
How are Framing Effects seen on shows like Deal or No Deal?
When things go well people take the deal (sure gain)
When things go poorly people take risks (chance to have no loss)
Based on the Omission Bias, how would a doctor react to being asked to prescribe a hypothetical patient arthritis medication (Y/N) or being asked to choose between prescribing a patient one of two arthritis medications or no medication (1/2/N)?
Prescription (Y/N): more likely to prescribe
Prescription (1/2/N): less likely to prescribe