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3 - Coggle Diagram
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Rule of Thumb
heuristics
mental shortcuts for solving problems in a quick way that delivers a result that is sufficient enough to be useful given time constraints.
practical principle or guideline that can be used as a rough basis for making decisions or solving problems
useful to enable or encourage decision- making in contexts when information asymmetry or complexity may make consumers stall.
Focuses on the Social, psychological and emotional factors that influence decision making
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Most Popular experiments
Ultimatum Game
one player proposes a division of a sum of money between herself and a second player, who either accepts or rejects. Based on rational self-interest, responders should accept any nonzero offer and proposers should offer the smallest possible amount.
Classical economics would suggest that the 2nd player should accept any amount of money because something is better than nothing which would be a rational decision but that is not always the case. This proves that people tend to behave irrationally
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Cognitive Bias
Framing Effect
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Classical economists argue that framing should have very little effect on decision making because most people are rational and intelligent
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Nudge Theory
based upon the idea that by shaping the environment, also known as the choice architecture, one can influence the likelihood that one option is chosen over another by individuals.
Choice architecture refers to a scenario in which the environment in which someone must make a decision has been carefully designed to try and influence that decision
