lecture4 - Heuristics and Biases of Decision Making ISQM...

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Heuristics and Biases of Decision Making ISQM 474 R. Nakatsu
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Cognitive Limitations of Human Decision Makers • Cognitive saturation or overload. • Humans are serial processors. • Difficulty in isolating the problem • Delimiting the problem space • Inability to see the problem from various perspectives
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Decision Making Under Uncertainty Kahneman and Tversky state that people make judgments under uncertainty by relying on a number of heuristics (e.g., representativeness, availability, adjustment and anchoring). These heuristics are highly economical and usually effective, but they lead to systematic biases.
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Representativeness People’s judgments about the probability of category membership depend on how similar the features of the target are to features of the category. Biases: stereotyping, insensitivity to sample size, base rate fallacy, regression to the mean
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Linda is 31, outspoken, and very bright. She majored in philosophy in college. As a student, she was deeply concerned with discrimination and other social issues, and participated in anti-nuclear demonstrations. Which statement is more likely? c.
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lecture4 - Heuristics and Biases of Decision Making ISQM...

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