Decision Making
Decision Making
Decision Making
Kartei Details
| Karten | 144 |
|---|---|
| Sprache | Deutsch |
| Kategorie | Psychologie |
| Stufe | Universität |
| Erstellt / Aktualisiert | 17.06.2024 / 18.06.2024 |
| Weblink |
https://card2brain.ch/box/20240617_decision_making
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Process of the conjunctive model
What are the specifications of a non-compensatory model?
«must-have or must-not-have»
Minimum/maximum specified for several dimensions
Choice from the resulting reduced set of alternatives (e.g., based on the additive model, additive difference model or satisficing)
What is the objective of the MAU model?
Objective:
Increasing utility of the result
Considering each attribute’s importance
How does the MAU model work?
The model gives:
Separate judgement of every dimension for each alternative
Adding up to overall score
Comparison of the overall score; choosing the alternative with the higher overall score
-> For comparison a similar amount of information gathered for both alternatives are required.
What is the process of the « additive difference model »?
Compare two alternatives on one dimension and identify the difference
Move to the next dimension
Weigh the importance
Summation of the differences
Decision
How can you compare more than two alternatives with the «additive difference model»?
Each next alternative is compared against the «winner» of the previous pairwise comparison. This goes on until there are no more available alternatives.
What is the basic idea behind Compensatory Models in decision-making?
In the compensatory model, the consumer arrives at a choice by considering all of the attributes of a product or service (or benefits from a product or service) and by mentally trading off the alternative's perceived weaknesses on one or more attributes with its perceived strengths on other attributes.
Select the compensatory models:
For which decisions are compensatory models used?
When we have to choose between two alternatives.
Name the different sets in the Evaluation of Alternatives
- Total set
- Awareness set
- Consideration set
- Choice set
Name two advantages of the satisficing heuristic
1. Saves cognitive as well as timely resources
2. The outcome of the decision is not considerably worse than the outcome when using a more elaborate process in relation to the effort
3. It often leads to a higher satisfaction
Describe the following framing principle:
Focus on gain vs. loss
People always seek to win or gain something. However the motivation to avoid a loss is stronger. This is called
"Loss Aversion".
Example 1: «You can save 100 CHF by changing your provider» / «You are losing 100 CHF by staying with your current provider»
Example 2: Tax reduction for families with children vs. Tax increase for people without children Tax increase would be a loss
Describe the following framing principle:
Aggregate
Adding small daily expenses makes a a one time payment look smaller -> Therefore the big expense is easier to justify
Example: A Coffee Machine costs 400 CHF, which is expensive. However if i buy a coffee at starbucks everyday for 3 months it costs me more than the coffee machine.
What is meant by the framing principle "break it down"?
Cost of a product/service is not stated as total price but instead as expense per day or per usage.
Do percentages have a stronger influence than absolute numbers?
No, the absolute numbers have a stronger influence than the percentages.
What is the effect of the framing principle "break it down"?
Makes product/service more appealing even though the customer may not use it as often as the frame suggests.
Please give examples of the framing principle "break it down".
Boost your social media marketing for less than $1 per day.
Gym membership only $ 30 per month
...
True or false: Positive and negative statements are perceived more strongly when backed by absolute numbers instead of percentages.
True
What is one advantage of maximizing?
The extensive search for information and options leads overall to better and more thought-through decisions
True or false: Percentages should be used for positive statements.
False
Please give an example for a negative statement with percentages.
“Only 1% of our products are defect.”
True or false: Absolute numbers should be used for positive statements.
True
If you have already chosen an implicitly favored Option A, what does the process of choosing criteria and comparing to other options serves for?
Choice of criteria and comparison is post hoc -> Process only serves to justify choice of Option A.
Implicitly favored alternative leads to confirmation bias and a distorted judgment of the other alternatives. The Process seems objective because criteria were specified and assessed. But the confirmation bias influences decision: Choice of criteria and comparison only serve to confirm the choice of Option A as the best option
What is Framing?
The way a problem is described. Different ways of describing the same problem lead to different decisions without changing the facts.
How could framing be applied on pricing models that are adapted to the individual consumer?
Personalized price = charging individual consumers based on their personal characteristics
Individual discount = consumers receiving a discount based on their shopping habits
Name the 4 signs to recognize a confirmation bias?
- Attention is focused only on one's own hypothesis
- More weight is given to arguments that support one's point of view
- People look for facts that support their hypothesis
- Ambiguous statements only support one's own hypothesis
«__________ is a phenomenon wherein decision makers have been shown to __________ and assign more weight to evidence that _____ their hypothesis and _____ or under-weigh evidence that could _____ their hypothesis. As such, it can be thought of as a form of _____ in collecting evidence.»
Confirmation Bias
Actively seek out
Confirms
Ingore
Disconfirm
Selection bias
Please name the countermeasures for confirmation bias.
1. Question your opinions and test your assumptions.
2. Avoid suggestive questions when consulting experts.
3. Explicitly identify intentions and objectives of the people involved.
4. Examine all evidence with the same rigor.
5. Assign a devil’s advocate.
6. Keep (emotional) distance to the decision and don’t become defensive.
Which bias is illustrated with this comic?
Confirmation bias
Explain what the he representativeness heuristic does?
Answers questions of probability by making an assessment of similarity
This is Sara. She is open and friendly and she is always up to date regarding trends.
Do you think Sara is a fashion designer or an influencer? Explain your answer and what is the mistake that is commonly made when answering these types of questions?
The probability that Sara is an influencer is higher than being a fashion designer because there are more Influencers than fashion desginers. People are making that mistake because of the base rate fallacy.
Please name the fallacies that are attributed to the Representativeness heuristic?
- Base rate fallacy (neglecting a-priori probability)
- Misconceptions of chance / gambler’s fallacy
- Regression fallacy
- Conjunction fallacy
- Insensitivity to sample size
Explain what is meant with “base rate neglect”?
Base rate fallacy or base rate neglect, is a cognitive error whereby too little weight is placed on the base, or original rate, of possibility
Based on the numbers, how high is the probability that someone correctly identifies how many couples are divorced in Switzerland?
Divorce rate: 10%
Based on experience people think that they can determine divorce rate with 70% certainty.
Does a Satisficer want to compare all options before making a decision. Strives for “the best”?
A coffee shop firm generates its revenue usually from 70% coffee and 30% bakery products throughout the year. The coffee shop firm consists of a large and a small branch. Which branch is more likely to deviate from the aforementioned revenue distribution on a single day and why?
The smaller branch is more likely to deviate on a given day because variation is more likely in a smaller sample.
What is it called when people do not take into account that variation is more likely in smaller samples?
Insensitivity to sample size
What is it called when people ignore the sample size when judging the probability of obtaining a sample statistic?
Insensitivity to sample size
What is the law of large numbers?
When the same trial is repeated a large number of times, the average of the results should be close to the expected value, and will tend to become closer as more trials are performed.
What is the risk of having a small sample size?
It increases the probability that the number which is measures is not representative for the population as it may lead to more extreme outcomes.
