04-30 Lecture Slides (Final)

Relevant examples can be retrieved from memory

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Unformatted text preview: f losing nothing n༆  ¨༊  Gain: A sure gain > a risky gain (possibly no gain at all) Loss: A sure loss < a risky loss (possible no loss at all) People have loss aversion n༆  n༆  Try to hold tight to what they already have Try to avoid a sure loss Summary n༆  Normative models in decision making: Utility theories ¨༊  Basic assumption: Humans are rational, consistent decision makers taking all factors into account ¨༊  Decision making under ideal circumstances = maximize utility ¨༊  Examples: Expected utility theory; multiattribute utility theory n༆  Violations of utility theories ¨༊  Preference reversal ¨༊  Framing effect n༆  So how do we make decisions? We often use heuristics! 5 4/30/13 Decision Making Heuristics n༆  Tversky and Kahneman’s influential proposal: ¨༊  People are more likely to make decisions based on heuristics than utility theories suggest n༆  Some of the major heuristics...
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This note was uploaded on 02/18/2014 for the course PSYC 2145 taught by Professor Cheriking during the Spring '07 term at Colorado.

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