Decision Making

Each day we are faced with multiple decisions. What should I wear? What should I eat? Should I go out tonight or stay home and study? What classes should I take? What apartment should I rent? Should I go to graduate school after I finish college? Should I stay in this relationship or should I move on? Some of these decisions are fairly quick and simple to make, whereas others are more complex and require considerable thought. As noted in your textbook (pp. 281–283), much research has been devoted to understanding the cognitive strategies that we use when we make decisions. Individuals utilize different models of decision making strategies depending on their experience and the context of their decision.

Question 1

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Question 2

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Question 3

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Reflect back on an important decision that you made in the past. Be sure to select a decision that you are comfortable sharing with classmates and/or your instructor. Which decision-making model best describes the steps you took to make that decision? Do you think you would have had a similar outcome if you had relied on one of the other models presented in the textbook? Explain your answer.

Question 4

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As noted in your textbook and in prospect theory, some decisions involve a high degree of uncertainty. In these instances, we may rely on one of two types of heuristics—the availability heuristic or the representativeness heuristic. Briefly describe each of these heuristics, and provide an example for each. Use an example from your own experience or from a hypothetical situation (do not use the examples provided in your textbook).

Question 5

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Question 6

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Question 7

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The _____ is likely to be used when people rely on their long-term memory to determine the likelihood of events occurring.

Question 8

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Liam and Brynn are on a vacation in Las Vegas. Their approaches to gambling are quite different: Liam tends to engage in risk-aversion, whereas Brynn leans more toward risk-seeking. While playing the slot machines, Liam hits a jackpot worth $1,100. He can either cash out or bet it all for a chance to win $2,200. The odds are 1 in 7 that he will win the bigger jackpot. According to Kahneman and Tversky’s prospect theory, how will Liam likely respond? How would Brynn respond if confronted with the same decision?
Because Liam tends to engage in risk-aversion, he is likely to choose the certain $1,100 jackpot rather than risk losing everything (i.e., the uncertain $2,200 jackpot). Brynn, on the other hand, will most likely select the risky alternative. She will risk losing the $1,100 in order to possibly double her winnings.