Decision Making and Problem Solving

Vocabulary flashcards covering normative and descriptive decision-making theories, heuristics, anchoring, framing, problem-solving classifications, and functional fixedness.

Normative theories

Theories of decision making that describe how people should make decisions based on rational principles.

Descriptive theories

Theories of decision making that describe how people actually make decisions, acknowledging that individuals have biases and are not always rational.

Heuristics

Mental shortcuts used by humans to make decisions that are fast and efficient, and usually accurate.

Anchor Bias

The cognitive tendency to make insufficient adjustments from an initial anchor regardless of domain, allowing irrelevant information to guide subsequent thinking, estimates, offers, or negotiations.

Tversky and Kahneman (1974) Anchoring Study

A study where participants spun a wheel stopping on either $10$ or $65$ before estimating UN membership of African nations; the $10$ group gave a median estimate of $25\%$, while the $65$ group gave a median estimate of $45\%$.

Precise vs. Rounded Anchors (Janiszewski & Uy, 2008)

A study demonstrating that precise anchors (e.g., $4,998$) result in smaller deviations and estimates closer to the anchor (e.g., $4,569$) compared to rounded anchors (e.g., $5,000$ leading to $4,158$).

Framing

The presentation of choices—such as in terms of gains versus losses or opt-in versus opt-out defaults—which significantly influences human decision making.

Opt-in system

A default policy framework in which individuals are automatically not enrolled and must actively choose to enroll, such as the United States informed consent system for organ donation.

Presumed consent (Opt-out system)

A default policy framework where individuals are automatically enrolled by default unless they take explicit action to opt out, leading to significantly higher effective consent rates.

Problem

A situation with no immediate, apparent, standard, or routine way of reaching a goal, requiring an individual to overcome obstacles or challenges.

Initial state

The beginning condition or starting point of a problem before any operations or steps are taken.

Goal state

The desired end condition or target state that an individual aims to achieve in problem solving.

Well-defined problems

Problems where both the initial state and the goal state are clearly defined, and the permissible moves and rules are known from the onset (e.g., checkers).

Ill-defined problems

Problems where the initial state and goal state are not clearly defined at the start, leaving uncertainty about what the question is or what the solution might look like (e.g., real-world decisions).

Insight Problems

A special class of ill-defined problems where a spontaneous solution suddenly emerges without an obvious step-by-step path, historically illustrated by Archimedes discovering water displacement and shouting "Eureka!".

Random search

A problem-solving heuristic that relies on trial and error by testing out many different ideas or theories to find a solution.

Hill climbing

A problem-solving heuristic where each step taken is the move that gets the solver closest to the end goal, often still requiring some trial and error.

Means-ends analysis

A demanding problem-solving strategy that involves breaking a problem down into subcomponents and formulating subgoals to progress toward the final goal state.

Tower of Hanoi

A classic puzzle used to illustrate means-ends analysis, requiring the solver to establish subgoals (such as moving smaller disks out of the way) to move larger disks toward the goal peg.

Functional Fixedness

A cognitive bias where individuals only see objects in terms of their traditional or conventional use, rendering them unable to solve problems that require utilizing an object in a novel way.