Module 1 Study Guide Flashcards

Framing

Defining the problem and decision context in the decision-making process.

ex: poker frame bets on uncertain outcomes while gardening frame nurtures ideas and eliminates weak ones

Thinking Frames

Mental models that highlight some aspects and ignore others

Decision Frames

The yardsticks, criteria, and reference points used to make decisions

Overconfidence Bias

A cognitive bias where individuals have an inflated belief in their abilities or predictions.

Three Types of Overconfidence

Misetimation, Misplacement, and Misprecision.

Misetimation

Incorrectly predicting outcomes, such as underestimating project completion time.

Misplacement

The belief that one is better than others, like assuming most drivers are better-than-average.

Misprecision

Overestimating the accuracy of judgments, leading to overly narrow confidence intervals.

Groupthink

A phenomenon where the desire for harmony leads to poor decision-making by suppressing dissent.

Affect Heuristic

Decision-making influenced by emotions, such as panic-selling during market crashes.

Availability Heuristic

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

Representativeness Heuristic

Making judgments based on stereotypes rather than statistical information.

Regression to the Mean

The tendency for extreme outcomes to return to average levels over time.

Structured Postmortems

A method for analyzing what went wrong in a decision to improve future outcomes.

Self-Serving Bias

The tendency to attribute successes to internal factors and failures to external factors.

Key Idea of Learning from Experience

Actively seek feedback and reflect on past mistakes to improve decision-making.