PPE - www.sas.upenn.edu/~baron/p153.html Normatiev decision...

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www.sas.upenn.edu/~baron/p153.html Normatiev decision making - How people should make decision when they want to be rational, obey the rules of probability and statistics, be logical Descriptitive decision making - how people actually do make decisions within the limits of their cognitive capacities Prescriptive decision making 0- The best advice we can provide others who want to make rational decision given our understanding of actual human decsion making 1- Very few people actually do this to guide other people for the best possible choice 2- More psychological a. If you want to measure someone’s preferences b. If you prefer A over B, but you own both A and B, regardless people will put a higher price (which they value more in monetary terms) on B over A (partially depending on how you ask the question) Voting and de-biasing are important What is a decision? - Maximizing utility - Weighing consequences - Choosing between several opportunities - Conscious selection of determination of choice options out there o Conscious selection of an outcome - To make a decision, you need a set of alternatives - A motivation to think about the consequences 1) Alternatives (things to choose from) [actions, acts, options = all the same] 2) State of nature (associated with alternatives, could be multiple) 3) Outcomes (consequences that follow from choices) 4) Utilities (psychological value of outcomes, is it satisfying, is it good, not good) 5) Goals (rules for deciding how to decide) 6) [The world]
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PPE - www.sas.upenn.edu/~baron/p153.html Normatiev decision...

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