HP2600 Chapter 13 Judgement, Decisions, and Reasoning

inductive reasoning

process of drawing general conclusions based on specific observations and evidence

factors involved in strength of inductive arguments

- representativeness of observations

- number of observations

- quality of evidence

heuristics

mental shortcuts that are likely to provide but do not guarantee a correct answer to a problem

availability heuristic

making a decision based on the accessibility of some information

events that more easily come to mind judged as more probable than events that are less easily recalled

illusory correlation

perception of a relationship between two events that does not exist or is much weaker than expected

stereotype

oversimplified generalisations about a group of people; tend to focus on negative qualities

representativeness heuristic

judging the likelihood that something is a member of a larger category depending on how well it resembles typical properties of that category

base rate information

information about the relative frequency of members of different categories in the population

conjunction rule

probability of a conjunction of two events (A and B) cannot be higher than the probability of the single constituents (only A or only B)

law of large numbers

the larger the number of individuals randomly drawn from a population, the more representative the resulting group will be of the entire population

myside bias

tendency for people to be biased toward evidence that favours their own opinions and attitudes

type of confirmation bias

confirmation bias

tendency to look for information that affirms pre-existing beliefs and ignore information that refutes them

backfire effect (reactance)

phenomenon in which one's support for a particular viewpoint is strengthened when presented with facts opposing their viewpoints

syllogism

form of reasoning that draws a conclusion from a set of premises

belief bias

tendency to think a syllogism is valid if its conclusion is believable

mental model

mental representation of a specific situation that can be used to determine the validity of syllogisms in deductive reasoning

if no exceptions that falsify the model is found, the syllogism is concluded to be valid

conditional syllogisms

syllogisms involving premises with an "if...then" form

falsification principle

testing a rule requires searching for situations that would falsify the rule

expected utility theory

theory that when provided with all the relevant information, people will act upon decisions that maximise expected utility

assumes that people act rationally

effect of emotions on decisions

anxiety increases risk avoidance

optimism increases risk-taking and tendency to ignore negative information

risk aversion

tendency to avoid taking risks

increases when people predict a particular loss to have greater impact than a gain of the same size

tyranny of choice

tendency for people to make no decision when faced with too many choices that leads to difficult decision-making

status quo bias

tendency to do nothing when faced with making a decision

framing effect

decisions are influenced by how the choices are framed

framing a decision in terms of gain promotes a risk aversion strategy

framing a decision in terms of losses promotes a risk-taking strategy

neuroeconomics

study of how brain activation is related to decision involving potential gains or losses

effect of brain activation on decisions

- activation of right interior insula connected with negative emotional states

- inhibition of prefrontal cortex (PFC) impairs cognitive ability to weigh choices

dual systems approach

idea that there are two mental systems

System 1: fast, automatic, intuitive

System 2: slow, controlled, thoughtful

halo effect

tendency for people to believe that presence of one positive quality implies other positive qualities