bus.dec.lec.26

bus.dec.lec.26 - Rational Decisions and Real Decisions...

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1 Rational Decisions and Real Decisions Business Decisions SOC 138/ECO 149
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2 Looking Back on Where We’ve Been Part 1: Models of Rational and Irrational Decision Making Behavior Part 2: Pathologies in Individual Decision Making Part 3: Decision Making in Social Contexts
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3 What Makes a Decision Rational? We began the course with a consideration of what went into a rational decision Decision structure The axioms of choice Probability theory and Bayes’ Theorem Game theory These tools can be used to identify errors in others’ decisions, or to make your own decisions more rational
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4 Frames and Psychophysics We talked about how we naturally tend to make decisions, and some vulnerabilities of this approach Gain/loss frames Loss aversion Risk perception: dread, knowability, and scale Not only do these models allow us to better predict how people will respond to real-world opportunities, but they also give us insight into why people react as they do Very important in a country concerned about terrorism
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Heuristics and Biases We learned about the rules of thumb we use to make “intuitive” judgments – and where they go wrong Representativeness Satisficing Win stay, Lose shift Static reasoning These ideas have many marketing applications, and can also be useful in your daily life
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This note was uploaded on 01/17/2011 for the course ECON 149 taught by Professor Sohrabian during the Fall '08 term at UC Irvine.

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bus.dec.lec.26 - Rational Decisions and Real Decisions...

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