Decision making Wk 3: Heuristics and biases part 2

Difference implicit and explicit anchoring

A self thought anchor vs. a given anchor

Anchoring index

Impact of anchoring, delta estimate / (A high - A low)

Uses and abuses of anchor and adjust

Sales promotion, price negotiation and cap on awards

Availability heuristic

Replacing a difficult question with: How many instances come to mind easily

What influences your estimate in the availability heuristic

Salient, dramatic or personal experiences and facts

Recall of content / ease of retrieval

Ambiguous whether availability is about how easy it is to recall, versus how many instances can be recalled

Affect heuristic

What do I think about it —> How do I feel about it

Availability cascades

Go from minor event to public panic to large scale governmental action

Sunstein vs Slovic on availability cascases

Irrational reactions to low probability risks lead to too strong impacts on public policy vs. small risks with large effects are overestimated but there is a genuine conflict

We blame actions over inactions

Representativeness heuristic