Judgement, Decisions, and Reasonings CogPsych

anchoring

relying too heavily on an initial piece of information when making decisions EX: “originally $100, now $40”

illusion of superiority

individuals overestimate their own qualities, abilities, and skills relative to others

dunning-kruger effect

people with limited knowledge or competence in a domain greatly overestimate their own expertise

framing effect

decisions change depending on how information is presented

tversky & kahneman (1981)

people choose differently when outcomes are framed as gains vs losses

preference reversal

individuals reverse their preferences based on how options are presented EX: choosing one product but pricing another higher

endowment effect

people value an object more just because they own it

kahneman et al. (1990)

sellers demand more money than buyers are willing to pay for the same item

heuristic

a mental shortcut that helps people solve problems and make decisions quickly and efficiently

confirmation bias

tendency to seek and favor information that confirms beliefs

representativeness heuristic

judges situations based on how closely they match a stereotype or mental prototype

availability heuristic

judges the likelihood of events based on how easily examples come to mind

tversky & kahneman (1974)

people overestimate events that are easier to recall

gambler’s fallacy

belief that past random events influence future ones EX: thinking a coin is “due” for heads after many tails