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Heuristics/cognitive heuristics (Underadjustment in applied situations…
Heuristics/cognitive heuristics
The conjunction fallacy Tverskey & Kahneman
Linda 31, single, outpsoken, very bright. Bank teller vs bank teller and women rights activist. Incoherent with subjective utility theory.1982
Estimations in reality
Representative heuristic
GBBGBG vs GGGBBB (Tversky & Kahneman, 1983)
Base rate neglect (Tversky & Kahneman, 1973)
30 engineers vs 70 lawyers
Misperception of randomness (coin toss)
Gamblers fallacy - bad luck in past sequence makes bad less likely in future bc sequence will look more random
(Clotfelter & Cook, 1993) 3 months for winning numbers to regain popularity.
Hot hand (basketball)
Representativeness adaptive? Probability matching 80% red 20% blakc
Milinski (1979) hunter gatherer ancestors, prob matching adaptive. population proportion at a food source would match proportion of food found there e.g. fish
Availability heuristic (Kahneman & Tversky, 1973) 105/152 'k'
suicides vs murder
Anchoring and adjustment heuristic
% African countries in UN
10 > 25% / 65 > 45%
Givolch & Epley 2001
Quattrone: absurd anchor and monetary incentive showed same effect. textbook or or less than $7000=?
Underadjustment in applied situations
Higher bargains produced better outcomes (Siegel & Fouraker, 1960)
Jurors gave harsher sentences (Greenberg et al., 1986)
Seller's asking price for house, change valuation by 10% (Northcraft & Neale, 1987)
Forecaster's prediction often too close to last data point and too close to other forecaster's prediction.