PSYC 2150 Lecture Notes - Lecture 22: Decision-Making, Sunk Costs, Utility

• School: University of Virginia
• Department: Psychology
• Course: PSYC 2150
• Professor: Dan Willingham

Document Summary

Irratio(cid:374)ality of choi(cid:272)e: we do(cid:374)"t (cid:373)ake (cid:272)hoi(cid:272)es just (cid:271)e(cid:272)ause good things will happen: eliciting preference, problem description (framing, budgets, sunk cost, hueristics, representativeness, availability, anchoring, simulation. Information we ignore: sample size, base rate, rational theory: unconscious rules that drive decisions made; internally consistent and apply to every decision, ex. A or b? pick a; b or c? pick b; a or c? picking a would make more sense: normative theory: some choices are valued more than others (based on rules, normative theory is rational, ex. Gambling and casino: another example of normative theory: expected utility theory value of prize is subjective, depends on individual, ex. Va lottery - dollar has low utility vs. the low chances of getting billion, which could change our lives. Irrationality of choice: eliciting preference, would you choose between 8/9 chances to win or 1/9 chance to win , majority of people pick a.