Decision Making

• Judgement


  Deciding on the likelihood of an event using incomplete information. Accuracy is important in judgement.
• Decision - Making


  Selecting one option from a range of variabilities. Factors involved depend on the importance of the decision.
• Bayesian Inference tells us how our initial beliefs should be updated by experience to produce posterior possibilities.
• Uncertainty, also known as degree of belief, is quantified by probability.
• Base - Rate Information is often neglected - The relative frequency of an event occuring in a given population.
• Representative Heuristic


  The assumption that an object belongs to a category because it belongs to that category.
• Conjunction Fallacy


  The mistaken assumption that the conjunction of two events occuring is greater than the possibility of one of them occuring.
• Availability Heuristic


  Something is more likely to happen if it can be retrieved more easily.
• Lichtenstein

  Causes of death that receive the most publicity are more likely to be chosen by participants.
• Pachur - Judgement is made based on own experience, media coverage and is linked to the affective heuristic - allowing own emotions to bias judgement.
• Judgements are anchored by a reference point which is sometimes irrelevant.
• Fast and Frugal Heuristics include the rapid processing of limited information.
• Take the best Heuristic

  Search Rule - Stopping Rule - Decision Rule
• Tversky & Shafir - 2/3 refused to bet on coin toss.
• Prospect Theory

  1. Participants identify a reference point which represents their current state
  2. They are more sensitive to potential loss than potential gain