Task 5 and 6

Question 1

Phases of decision making

Accepted Answer

ð Setting goals – goals influence decisions as decisions usually are steps toward something you want to accomplish ð Gathering information – to make decisions you need to know what the options & their consequences are (might make use of experts if unclear) ð Decision structuring – organise all information especially for complex cognitions involving many options ð Making a final choice – select from a final set of options (involves other decisions like when to stop the information gathering phase) ð Evaluation – identify processes during decision making that didn’t go so well and those that went well so that they ought to be used in the future

Question 2

Cognitive illusions

Accepted Answer

errors of cognition that come about for understandable reasons and that provide information relevant to understanding normal functioning -> systematic biases

Question 3

Subjective Probabilities

Accepted Answer

– probability estimates of outcomes differ between people as they are influenced by characteristics of the decision maker (e.g. mood)

Question 4

Availability Heuristic

Accepted Answer

P Instances that are more easily thought of stand out more in one’s mind P Own behaviours are more prevalent to us than that of others P Failure to include base rate info in probability estimation P Availability by recall (number of instances recalled) vs. fluency mechanism (how easy it WOULD be to recall without actually retrieving from memory)

Question 5

Representativeness Heuristic

Accepted Answer

P Expectation that results are representative of the process that produced them (e.g. random process g random results) P Failure to include base rate info P Gambler’s fallacy - mistaken belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future P Mistaken belief in the law of small numbers: people expect a small sample to show the same proportions as a large sample would P “Man who” arguments Conjunction fallacy – mistaken belief that the probability of a conjunction of 2 events (A & B) is greater than the probability of one of them

Question 6

Framing Effect

Accepted Answer

P "Context effect” in decision making P Changing the description of a sitch can lead people to adopt different reference points g see the same outcome as a gain in one stich and as a loss in another § Description frames the decision (e.g. 2 gas stations) Treat losses more seriously than gains of the same amount (care more about losing than winning a dollar) -> loss aversion

Question 7

Anchoring

Accepted Answer

P Rely too much on an initial piece of information offered (= anchor) when making decisions

Question 8

Sunk Cost Effects

Accepted Answer

Greater tendency to continue something once one has invested in it (even though it doesn’t change the likelihood of future success)

Question 9

Illusory Correlation

Accepted Answer

P Seeing a relationship between variables even when there isn’t any Typically have some prior associations in peoples’ minds

Question 10

Hindsight Bias

Accepted Answer

P Tendency to exaggerate what could’ve been anticipated in foresight when looking back in hindsight Once you know how a decision has turned out, the events leading up to the outcome seem more inevitable than they really are

Question 11

Confirmation Bias

Accepted Answer

Only gather info consistent with initial hunch

Question 12

Overconfidence

Accepted Answer

P People’s impressions of own accuracy are inflated (see calibration curve) g arrogance in decision making Fail to see need for help

Question 13

Omission Bias

Accepted Answer

P Tendency to prefer inaction to action when engaged in risky decision making Anticipated regret: greater when unwanted outcome caused by own actions rather than inaction

Question 14

Satisficing (Simon)

Accepted Answer

P Decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution P When confronted with a ton of choices for a specific need, will select a product or service that’s "good enough" rather than expending effort and resources on finding the best possible or optimal choice

Question 15

Utility Models

Accepted Answer

P Normative models – define ideal performance under ideal circumstances P Prescriptive models – show how we ought to make a decision (= consider that circumstances aren’t ideal and show how to best decide) P Descriptive models – simply detail what people actually do when they make decisions (= actual performance)

Question 16

Expected Utility Theory

Accepted Answer

P Normative model: there’s no better way of choosing among options that in the long run will increase overall satisfaction than using EU P If you always choose so as to maximise EU, then over a sufficiently large number of decisions, your own satisfaction will be highest P Expected value ( ) – determine EV of a gamble to choose the one with the higher value & see how much money you should spend P Expected utility () – captures ideas of happiness, pleasure & satisfaction that comes from achieving goals (= psychological rather than monetary value) Limitations g Calculation of EU difficult as info about several aspects of the decision must be integrated (various factors and goals) g Provides an account only for making the final selection from a set of alternatives, not of making decisions in which one faces the “status quo vs. make a change” option g Doesn’t describe processes by which people structure a decision (= gather info and lay out possibilities & parameters)

Question 17

Multi-Attribute Utility Theory (MAUT)

Accepted Answer

1. Break a decision into independent dimensions 2. Determine the relative weights of each dimension (= their value – subjective!) 3. List all alternatives 4. Rank the alternatives along the dimensions 5. Multiply ranking by the weighting of each alternative to determine final value 6. Choose alternative with highest value P Normative model: if people follow MAUT they will maximise their own utility in a way that is best for achieving all their goals P Critical that dimensions are independent so must be chosen carefully P Assumes that a person would be willing to choose an alternative that was not highest on the highest ranked dimension when the relative position on other dimensions compensates for that Limitations g Elimination by aspects (descriptive model) – when decision makers have too much info to deal with they don’t take all dimensions into account but rather select one factor, pick a threshold value and everything that exceeds that threshold value is tossed (g no compensation) § Nonoptional heuristic to reduce cognitive strain Doesn’t provide a good structuring

Question 18

Bounded Rationality (Thaler/Simon)

Accepted Answer

g people are as rational as their processing limitations permit § Produce reasonable & workable solutions to problems in spite of our limited processing ability by using heuristics § Can be bounded by environmental (= information costs) & cognitive constraints

Question 19

Image Theory

Accepted Answer

P People don’t formally structure decisions P Most decision-making done during "pre-choice screening of options” phase § Boil down number of options under active consideration § Ask themselves whether a new goal/ plan/ alternative is compatible with 3 images 1. Value image – decision maker’s values, morals, principles 2. Trajectory image – goals & aspiration for the future 3. Strategic image – way in which decision maker plans to attain his/ her goals P Options judged incompatible with at least one of the images are dropped from further consideration -> non-compensatory P More than one survivor of pre-screening -> go over to compensatory/ other strategy

Question 20

Recognition-Primed Decision Making

Accepted Answer

P Experts most likely rely on intuition, mental simulation, making metaphors/ analogies and recalling or creating stories when deciding § Time-pressured, high-stakes decisions P Compare current sitch to sitch they’ve encountered before

Question 21

Prospect Theory -Kahneman

Accepted Answer

P Individuals identify reference point (subjective!), generally representing their current state § In doing so they use heuristics (e.g. framing effects) P Treat losses more seriously than gains of the same amount (care more about losing than winning a dollar) -> loss aversion § Greater emotional impact

Question 22

Constructivist Approach - Cultural Differences

Accepted Answer

P Emphasis on dynamics of schema activation & external features of social environments that play numerous roles in cultural patterns of judgements & decisions P Cultural representations are dynamic schemas rather than ever-present personality traits § They’re not always active – switch between cultural frames in response to situational cues § Explains how people can be fluent in more than one culture without simply blending their biases (see priming effects) P People are active rather than passive in the interpretations that guide their responses § Conscious & non-conscious motivations moderate assimilation to salient cultural cues P Moderate familiarity with culture is enough to internalise some of its norms of judgement P Study bicultural participants in priming experiments

Question 23

Self-Other Decision Making

Accepted Answer

g Making choices for others involves less loss aversion than making choices for self g Omission bias also greater for self g Construal level (= psychological distance) – losses loom larger for distances that are short § With distance regulatory focus shifts from prevention focus to promotion focus g Seek more info when making decisions for others g When making decisions for others it gives us a feeling of power which makes us less sensitive to losses

Question 24

Effects of Self-Construal Priming on Risk-Taking

Accepted Answer

g Everybody has 2 coexisting selves in their memory: one independent & one interdependent § Cultural differences stem from likelihood of sampling one or the other (depending on social role & sitch) g Consumers primed on an interdependent self are less likely to take social risks than those primed on independence g Consumers primed on interdependence are more likely to take financial risks § Cushion hypothesis – social network acts as safety net § Activate in memory a higher number of friends/ family members & rate their relationships with those more positively g THUS, friends & family members offer a cushion that lessens the effect of financial loss but magnify the embarrassment of a social misstep

Question 25

Endowment Effect -Thaler

Accepted Answer

g The tendency for owners (potential sellers) to value objects more than potential buyers § Simply owning an object can enhance its perceived worth § Activates automatic association between object & self g because of the intrinsic tendency to enhance the self, the self-object association boosts the objects perceived value g Smaller effect for Asians than for Westerners (study 1) § Interdependent self-construal g less positive regard for the self g mere ownership of an object doesn’t elicit enhancement of its perceived value § Independent self-construal prime also increased endowment effect (study 2) g Cultural differences in the effect emerged only when self-object associations were salient (otherwise they disappeared) g Unlikely to be due to loss aversion as Asians tend to be more prevention focused & biased toward the status quo

Question 26

Nudging - Thaler

Accepted Answer

P – steer people in a particular direction while still allowing them to go their own way (a way of influencing behaviour) § Alter “choice architecture” – the background against which choices are made § Help them make good decisions without coercing them

Question 27

Default Rules/ Options - Nudging (Thaler)

Accepted Answer

P the option a decision maker will obtain if he/she does nothing (e.g. when you marry the default rule is for both partners to keep their surname, however most women depart from that rule (for several reasons) and undergo action to change their name while men usually stick to the rule) § Establish status quo: determines the reference point for counting changes as losses or instead as gains § Whether one sticks to or departs from them depends on the costs of the decision & the cost of error § Default rules are often thought to be the most effective nudge (fail when strong antecedent preferences or opposed with counternudges)

Question 28

Nudges are ineffective when…

Accepted Answer

§ They’re based on inaccurate understanding of behaviour so they don’t have an impact (important to test behavioural hypotheses!) § Info is too confusing/ complex so people are unaffected by it § People show reactance – reject an official effort to steer just because it’s an official effort to steer § They only have a short-term effect § Might influence the desired conduct but also produce compensating behaviour (rebound effect) g nullifies overall effect

Question 29

3 potential responses to failed nudges

Accepted Answer

§ Do nothing – failure might show that there is no problem at all § Nudge better/ different when convinced that people’s choice is not promoting their welfare § Fortify effects of the nudge with a more aggressive approach (e.g. counter-counternudges or bans)

Question 30

Preferences of Default Rules/Nudges

Accepted Answer

§ Strong -> they define the reference point from which losses are measured, not the rule/nudge § Weak -> information signal contained in default rule carries weight § No preference -> choosers will accept default rule or decline to focus on it

Question 31

Ubers Tricks

Accepted Answer

g Nudging g Combat shortages by advising drivers to move to areas where they exist or might arise g Encouragement toward concrete goals (money) § Income targeting – workers decide how long to work with a goal in mind (highly inefficient as they end up working long on slow days and short on long days) g Ludic loop – give them feeling of progress toward a goal that is always just beyond the drivers grasp g Increase hours drivers schedule during busy periods by making use of loss aversion § Show how much drivers will lose when they keep driving during less busy periods rather than tell them how much they earn when the drive during busy periods g Forward dispatch – dispatch new ride to driver before current one ends § Drivers stay on the road longer as it takes more effort to stop than it does to keep going § Don’t let drivers see where next ride is going, making it hard to judge how profitable it is

Question 32

Base Rate Information

Accepted Answer

Base-rate information – the relative frequency with which an even occurs or an attribute is present in the population ® People often take less account of the prior odds than they should ® The relative number of green and blue cabs is given. One cab has an accident and an eyewitness, which is sure for only 80% seems to be sure of which color the cab was. People will believe the eyewitness more likely and therefore forget about the relative numbers of cabs

Question 33

Support Theory

Accepted Answer

Support theory is party based on the availability heuristic. Key assumption: an event appears more or less likely depending on how it is described ® More explicit descriptions have greater subjective probability for two main reasons 1. An explicit description often draws attention to aspects of the event less obvious in the non-explicit description 2. Memory limitations may prevent people remembering all the relevant information if it is not supplied Findings: ® Subjective probabilities were higher for explicit descriptions even with experts ® Sometimes, the opposite was found: Explicit descriptions may reduce subjective probability if it leads us to focus on low-probability causes à makes it more effortful to comprehend The theories main predictions have received empirical support. Limitations: 1. The reasons why explicit descriptions generally increase an event’s subjective probability are not clear Explicit descriptions can reduce subjective probability if it leads individuals to focus on low-probability causes or if they are hard to understand

Question 34

Fast and Frugal Heuristics

Accepted Answer

Fast-and -frugal heuristics: involve rapid processing of relatively little information (a category of heuristics) Take-the-best heuristic: a key fast-and-frugal heuristic. It is based on ‘take the best, ignore the rest’ Which city is the larger, Cologne or Mönchengladbach? 1. Search rule: search cues (name recognition) 2. Stopping rule: stop after finding a discriminatory cue (the cue applies to only one of the options) 3. Decision rule: choose outcome (cologne) Recognition heuristic: select the object that is recognized in preference to the one not recognized ® People are much more likely to use it when it is valid Hiatus heuristic: only customers who have purchased fairly recently are deemed to be active. How do people decide which heuristic to use? 1. The nature of the task and individual memory limit the number of available heuristics 2. People select one of them based on the likely outcome of using it and its processing demands Heuristics sometimes outperform judgements based on much more complex calculations Findings: ® More intelligent people are more likely to use the take-the-best strategy when it was the best one to use o Simple heuristics are more effective in conditions of high than low redundancy of the different cues in the task Limitations: 1. Use of the recognition heuristic is more complex than traditionally assumes 2. Using the take-the-best heuristic is also more complex, as it requires us to organize various cues hierarchically based on their validity. We often do not know the cue validities 3. When the approach is applied to decision making, it de-emphasize the importance of the decision. (which coke to buy vs. which University)

Question 35

Natural Sequency Hypothesis

Accepted Answer

Natural sampling: the process of encountering instances in a population sequentially 1. We care more likely to use natural sampling than to deal with fractions and percentages à performance is greater when dealing with natural frequencies 2. Judgements based on frequency information are often superior to those based on probability information Limitations: 1. When we encounter a sample of events, the frequencies of that events may differ substantially from natural or objective samples (university students vs. a whole population) 2. We have to distinguish between natural frequencies and word problems used in research. (in word problems, participants receive frequency information and do not have to grapple with the complexities of natural sampling) 3. People sometimes find it harder to think in frequencies than in probabilities

Question 36

Dual-Process Theory - Kahnemann

Accepted Answer

Probability judgements depend on processing within two systems: System 1® fast ® automatic ® effortless ® implicit ® often emotionally charged and difficult to control System 2® slower ® serial (only one at a time) ® effortful ® more likely to be consciously monitored and deliberately controlled ® relatively flexible and potentially rule-governedSystem 1 generates intuitive answers which are monitored or evaluated by system 2 (correct them). ® Involves serial processing Findings: ® People producing the correct answers (and presumably used system 2) took longer than those apparently using system 1 ® It is oversimplified ® Participants were less confident about their responses when they produced incorrect intuitive answers than when they produced correct answers à there is some processing of base-rate information even when it does not influence people’s judgements Assumptions: 1. Initial answers should rarely reflect base-rate information but instead should involve representativeness heuristics 2. Base rate information should be used much more often in deliberate answers ® Neither prediction was supported, as processing is more flexible Cognitive load should reduce system 2 processing and lead to answers making less use of base-rate information ® It led to the increase use of information presented briefly, regardless of whether the information referred to base-rates or personality The usage of system 1 and system 2 processing depends more on how information is presented than on its content. Limitations: 1. It is based on the assumption that people almost exclusively rely on system 1 à oversimplification 2. Danger of assuming error-prone performance reflects exclusive use of system 1, whereas accurate performance reflects system 2. 3. Base-rate information will influence judgements only when the conditions favor the use of effortful system 2 processing à oversimplification 4. The assumption that processes used on judgement tasks can be dividend into heuristics and controlled ones is too neat and tidy

Question 37

Alternative to Dual System Theory by Kahnemann Logic Intuition model

Accepted Answer

Logical intuition model: there is rapid intuitive processing of heuristic information and intuitive logical processing. (system 1) 1. Includes base-rate information and heuristics 2. It is easier to understand how conflicts between heuristics and base-rate information are rapidly detected

Question 38

What is moral reasoning?

Accepted Answer

P The process by which individuals try to determine the difference between what’s right or wrong

Question 39

Reason-responsive behaviour

Accepted Answer

P need ability to be receptive to reasons (e.g. taking drugs disrupts life) and translate those into choices & subsequent behaviour (“don’t god damn do it”) P Moral cognition integrates affective & cognitive processing P Often based on emotion not logic

Question 40

Moral Dumbfounding

Accepted Answer

people often reach strong moral conclusions they cannot logically defend

Question 41

Deontology

Accepted Answer

P Deontology – ethical theory that uses rules to distinguish right from wrong g rule based § Easy to apply but possibly disregard consequences of our actions when determining what’s right/wrong (often produces outcomes many people would find inacceptable) P The right doesn’t necessarily maximise the good P Assumes that moral judgements evoke psychological rules grounded in concerns about moral rights & duties P Acknowledges that moral agents have special duties to those close to them -> preferential treatment P Agent-relative – each person is responsible for the moral value of their own action P Doing versus allowing – actively harming is worse than allowing harm to occur Doctrine of double effects (Other card) P Focus on negative obligations: urges moral agent to avoid aiming to do harm (doing good is good but avoiding evil is paramount) P Moral rules, anticipated consequences, evaluations of intentions, ability to act freely & emotions all feed into moral judgements (bidirectionally) P Eastern Cultures System 1

Question 42

Doctrine of double effects

Accepted Answer

P – an action intended to do harm (even if it doesn’t work out) is morally worse than an action that produces unintended but foreseen harm § Explains trolley dilemma: people would divert the trolley but not push the man § Intentions are crucial

Question 43

Utilitarianism

Accepted Answer

P Utilitarianism (consequentialism) – determine right & wrong by focusing on outcomes g reason based § Most ethical choice is the one that produces the greatest good for the greatest number P Agent-neutral – what is right for one is right for everyone in the group P Doing versus allowing – irrelevant Limitations P Can’t always tell consequences in advance + can’t account for justice & individual rights P Can’t explain group biases P Western Cultures System 1

Question 44

Utilitarianism

Accepted Answer

P Utilitarianism (consequentialism) – determine right & wrong by focusing on outcomes g reason based § Most ethical choice is the one that produces the greatest good for the greatest number P Agent-neutral – what is right for one is right for everyone in the group P Doing versus allowing – irrelevant Limitations P Can’t always tell consequences in advance + can’t account for justice & individual rights P Can’t explain group biases P Western Cultures System 1

Question 45

Dual Process Theory (Greene)

Accepted Answer

P Two competing neurological systems P System 1: Conscious, rational evaluation of the facts that produces a utilitarian response § Activated when there is reduced personal/ emotional involvement § Cognitively controlled, utilitarian P System 2: affective response g non-utilitarian & less rational § Activated when emotionally invested § Automatic, deontological P Moralists can influence each other not simply by modifying each other’s intuitions (SIM) but also by transmitting moral principles that may be used to override moral intuitions that would otherwise dominate behaviour P People under stress tend to use system 2 P Male Gender more prone to make utilitarian choices

Question 46

Dual System Theory

Accepted Answer

We have two distinct cognitive systems competing in moral reasoning: 1. Automatic-emotional process: fast, intuitive, emotionally-driven 2. Conscious-controlled process: slow, conscious deliberation required, high cognitive load Interaction between the systems: a) Serial processing b) Parallel processing: One will choose to refrain from the second system as it is more cognitively demanding Evidence: ® Fmri studies ® Reaction times – high cognitive load à increase the likelihood of using system 2 Limitations: ® Ignores the motivational aspect in decision making in human social context Using moral dilemmas is not realistic

Question 47

Social Intuitionist Model (SIM) – Haidt

Accepted Answer

P Set of causal links, connecting 3 types of psychological processes: intuition, judgement & reasoning P Intuitive judgement link – one’s judgements are driven primarily by one’s intuitions P Post-hoc reasoning link – reasoning driven primarily by one’s judgement rather than the other way around P Reasoned persuasion – reasoning influences another’s intuition P Social persuasion – own judgement influences another’s by changing their intuition without explicit reasoning P Reasoned judgement – allows reasoning to directly influence judgement P Private reflection – allows reasoning to influence judgement by modifying one’s intuitions P Limitations: Underemphasiszes role of reasoning, mostly self centred and blab la bla, not everybody follows this model

Question 48

Moral Foundations Theory – Haidt

Accepted Answer

P 5 psychological moral foundations on which most cultures & individuals build their systems of morality Individualising Foundations § Care/ harm g prohibitions against harm § Fairness/ cheating g reciprocal altruism Binding Foundations § In-group/ loyalty g commitment to our social group § Authority/ respect § Purity/ sanctity -> moral reactions of disgust against spiritual/ physical contagions that must be avoided § Individualising and Binding Foundations practically on a scale, and you are somewhere in-between

Question 49

Relational Models Theory – Fiske

Accepted Answer

g We employ four basic schemas/ mental models that coordinate nearly all social interactions (Unity,Hierachy, Equality, Proportionality) g Usually employ multiple models at the same time to navigate different aspects of a social interaction g Within each model there’s a moral motive (bold) that is responsible for guiding our moral judgement & behaviour § Any given action may be considered right/just/fair in one motive while being wrong/unjust/unfair in another g Null morality – lack of any kind of relationship leads to moral indifference g Conflicting moralities – conflicting judgements come from the constitution of different social-relational models & their motives for the otherwise identical situation -> interpret actions differently § Also occur within individuals in situations where the appropriate moral motive is ambiguous g Adds to MFT by grounding foundations in a theory of social relationships to predict when & how people rely on one foundation over another

Question 50

Unity - Communal Sharing - Relational Models Theory - Fiske

Accepted Answer

P Perceive people in same group as undifferentiated & equivalent in a salient feature P Care for & support integrity of an in-group through a sense of collective responsibility & common fate P Those included in the group are within the scope of moral concern § Preferential treatment P Collective responsibility for wrongdoing P Honour cultures: when relationship violated even against will (e.g. rape) the only way to remove the families shame is to kill the “polluted” women g celebration that occurred after reflects attempt to re-establish unity

Complex Cognition (Subject) / Task 5 and 6 (Lesson)