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1.6 - Coggle Diagram
1.6
How we really make decisions
There is always a fight between intuition and logic in our brains
Most of the people do not make rational decisions
Unintentional blindness
is a common phenomena
Cognitive biases
(predictable or systematic errors) are active in system 1 (intuitive)
Podcast
(Nicola Bown, 2021)
Cognitive Limitations
Limited Capacity Processing
(Simon and Miller, 1950)
Three Ways
to cope with limited capacity processing
Use other resources
Simplify the problem
Retrieve similar solution from memory or past experiences
This in specific could be problematic
Herbert Simon
Economic models are in accordance with normative theory of decision making
The normative theory make
unrealistic assumptions
about human abilities to process information
Daniel Kahneman
(Thinking Fast and Slow)
Human being have Two thinking systems:
System 1
Fast
Automatic
Intuitive
Occasionally unreliable
System 2
Slow
Deliberative
Logical
Effortful and reliable