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Decision Making: A commitment to a course of action - How do we make…
Decision Making:
A commitment to a course of action -
How do we make decisions?
Judgement = An assesment or belief about a given situation (Manketlow et al.,2012)
Normative theory = choose the decision that has the biggest gain
Decision theoric approach (Neuwmann& Morgenstern):
Maximum expected utility theory:
The act with the highest value is chosen - the option that maximizes the expected utility
comes from multiattribute utility = the idea that there are multiple values to one decision
You assign different utilities to different outcomes: and we rank them to choose a decision
Classical Decision theory (early model) = People optimize their decisions (Manktelow, 2012)
Disadvantage of the theory: We usually don't have that much time to make such complex decisions
Naturalistic decision making:
When choices are made in a natural enviornment - when not enough time to make calculated decisions ex: on a surgery table
The Model of the economic Man & woman
(more objective model)
You know all different choices & outcomes for each
You are sensitive to the small differences between choices
You are rational (choose the option with the max. utility) when you make decisions
Disadvantages:
Assumes that people can evaluate the difference between outcomes
Difficult to consider every aspect of every possible decisions
People don't really calculate the evaluation of each choice
Subjective Expected Utility Theory
(more subjective model): When you make a decision you choose the option taht maximizes pleasure & minimizes pain
calculation of 2 elements
Subjective utility = the individual's personal calculation of value/by how much value does one thing have
Subjective probability = The individual's calculation of the likelihood
Exception!
Heuristics & biases:
Mental shortcuts that lighten the cognitive load of making decisions (Johnson-Laird, 2013)
Advantage: Facilitates decision making
Disadvantage: Allows a greater chance of error
Types of Heuristics
Representative Heuristic:
When you judge the posssibility of an event according to how similar it is or how representative it is to the population from which it is derived
due to failure to understand base rates
Anchoring heuristic:
When tend to rely on the first piece of information given. When you hold on to this, to adjust your decisions
example = If told that everybody donated 300 then you will more often donate around the same number
Availability Heuristic:
Our decision/judgement depends on how easily you can call to mind what you perceive as relevant (available information)
Satisficing:
when you choose the first options that is satisfactory
Maximizing:
When you consider every single option before choosing
vs.
Elimination by aspect
= When you eliminate alternatives to a decision by looking at the different aspects of each at a time
example
When choosing a college - focus on one aspect at a time as the price, the courses, location, etc etc
when don't have enough time to consider all alternatives
The framing effect:
The way the options are presented influences the choice of a decision (Stark et al., 2017)
If an option is presented in terms of gain vs. an option presented in terms of loss, you will probably choose the one in gain because we tend to choose the option that gives a certified gain ex: 400 deaths vs. save 600 lives - when presented as lives = more attrcative!
When we evaluate decision we consider the
opportunity cost
= the price paid for choosing one option instead of the other
Group decision Making (Sternberg & Sternberg, 2017)
Advantages:
Increases effectiveness
Gain expertise from all group members
Group memory vs. individual memory
Disadvantages:
Result of trying to avoid conflict
Descriptive Theory of decision making:
An account of what people actually do when taking decisions; explanation (description) (Manktelow, 2012)
Prospect Theory:
When you make a decision by assessing the utility by looking at probability and expected values. Comparing the outcome to the now.
Tend to choose options with a higher expected value.
We are more risk averse (less likely to take risks) when we focus on what you gain. Because avoiding pain is more important than gaining even more pleasure. Loss feels worse than gain.
Regret Theory:
When people anticipate regret when making decisions. The fear of regret can prevent the ability to make a decision that would benefit them instead of harming them.
Social Behaviour
Prosocial Behaviour
- actions by individuals that help others, often, with no immediate benefit to the helper (Branscombe & Baron, 2017)
Test
Participants had to write down what they thought a person on a tape was thinking.
Motives behind such behaviour (Chiercha, et al. 2017)
empathy-altruism hypothesis - some are solely motivated by desire to help someone in need
Yet still makes us feel better/good!
Personal motives
Empathy - understanding someone's emotions, concern for the other
ex: No one taking the last peice of cakle at a party
Feeling of fairness
People's own belief of what is "fair" influences their decisions
Test
Prisoners dilema
: If an amount of money must be split between two people. One proposes and the other responds (He can only accept or reject) If rejected none of the players recive money) (Bland et al., 2017)
Very often if the proposer proposes more ofr him than the responder. The responder will reject.
Social Pressure
This is due to the responder's belief of what is fair. This is to punish the socially unacepted behaviour.
This does not seem to make much sense because no matter what the responder would receive money instead of 0
Fallacy
Gambler's Fallacy
: When you think that you have more chances of winning this time, becuase you lost previously. But acctually you have as much chance of loosing or winning as the last time.
Sunk Cost Fallacy
Conjunction Fallacy:
When you think that specific events together are more probable than only one alone
ex: When you think it is more likely to be a women and a feminist, than just a woman
test = Probabilistic truth table