Here are my notes on this topic:
1. Tversky & Kahneman
Judgement
- Heuristics
- Rules of thumb
- Work most of the time
- Easy to apply\
- Availability Heuristic
- Must be true if I think of it easily
- Use examples that come to mind
- Farmers & Librarians
Decision Making
- Fast & Slow
- Dual-System Theory of Thinking
- System 1
- System 1 is “home” of:
- Heuristics
- Cognitive bias (systematic errors)
- Availability heuristic
- Anchoring
- Intuitive, automatic, experience-based, and relatively unconscious
- rooted in impressions
- System 2
- reflective, controlled, deliberative, and analytical.
- monitors or provides a check on mental operations and overt behavior—often unsuccessfully.
2. Rational choice theory
- Free market
- Independent choice
- People are rational
- Use cost-benefit analysis
- 3 factors
- Rational actors
- Self interest
- Invisible hand
- Adam Smith, 1759
- unintended greater social benefits and public good brought about by individuals acting in their own self-interest
3. Predictably Irrational
- Anchoring
- Cognitive fixedness
- Good comparative deciders
- Make rationally-irrational decisions
- Ignore facts
- Misinterpret data
- Gambler’s fallacy
4. Dan Ariely
- Ikea Effect
- people tend to place greater value on things they make or assemble
- effort effect
- Beer
- alcohol has a lot to do with expectations
- Study 1
- blind taste test, which want full glass of?
- Regular beer vs special beer
- prefer special beer
- Budweiser vs Sam Adams
- no difference
- Study 2
- told up front that one is regular and one has balsamic vinegar
- prefer regular beer
- Study 3
- Half told upfront, given choice
- Half told after taste, given choice
- Results
- Senses first, ignore cognitive expectation
- Cognitive (top-down) expectation first, stick with cognitive rule
- Brain chances the way we perceive?
- Self Control
- Movies
- Chocolate
- Global warming
- Clocky
- Reward substitution
- Self-control contracts
- Ulysses
- informal
- formal
- if-then
- Money to charity
- If don’t, money to cause you like
- If don’t, money to cause you hate
- Loss aversion
- Drug program
5. Rotter
- combines behaviorism plus cognition
- general expectation theory
- BP = f(E & RV)
- behavioral potential (BP)
- expectations (E); likelihood
- reinforcement value (RV); reward size
- locus of control
- “externals”
- learned helplessness
- “internals”
