Decision Making and Reasoning: Fallacy

Fallacies

Errors in reasoning that undermine the logic of an argument

Heuristics and fallacies

often are studied together because they go hand in hand.

Gambler’s Fallacy

Mistaken belief that the probability of a given random event, such as winning or losing at a game of chance, is influenced by previous random events.

Hot Hand effect

Belief that a certain course of events will continue.

Conjunction Fallacy

An individual gives a higher estimate for a subset of events (e.g., the instances of -ing) than for the larger set of events containing the given subset (e.g., the instances of n as the second to the last letter).

Representativeness Heuristic

It is when we judge how likely something is based on how similar it seems to something we already know.

representative heuristics

This may induce individuals to engage in the conjunction fallacy during probabilistic reasoning.

Sunk Cost Fallacy

It represents the decision to continue to invest in something simply because one has invested in it before, and one hopes to recover one’s investment.

Opportunity Costs

Defined as the prices paid for availing oneself of certain opportunities. Anytime you take advantage of an opportunity, there are opportunity costs.

opportunity costs

Going on a vacation instead of working, the opportunity cost is the extra income you could have earned.