05-02 Lecture Slides (Final)

G iowa gambling task anterior cingulate n conict

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Unformatted text preview: the semester party by thinking of a similar party you threw for the Super Bowl and then making some adjustments (e.g., weather, right before the finals) n༆  Initial anchors can exert an influence even when they are arbitrary or biased ¨༊  This tendency is exploited by salespeople and auctioneers (3) Anchoring and Adjustment Heuristic n༆  Example of “bias” due to this heuristic ¨༊  ¨༊  Version A: 1x2x3x4x5x6x7x8=? n༆  Mean: 102,842 n༆  Median: 1,350 Version B: 8x7x6x5x4x3x2x1=? Mean: 508,648 Much Median: 5,000 bigger Correct Answer: n༆  40,320 n༆  n༆  ¨༊  Initial numbers (e.g., 1 x 2 for Version A and 8 x 7 for Version B) likely served as an anchor for your estimates Rationality Reconsidered n༆  Do these biases mean that human decision making is “irrational”? n༆  Herbert Simon argues that it is better to “satisfice” than “optimize” ¨༊  ¨༊  Not necessarily “satisfy” + “sacrifice” n༆  bounded rationality (= the idea that people are as rational as their processing limitations permit) Normative models (uti...
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