Abstract: . . .  preference. Preference Reversals When people are asked to choose between two bets, they prefer the ones with the highest probability of winning, but when they are asked to set a price for how valuable the bets is, they prefer the ones with the highest potential payoffs . Therefore, peoples’ preferences reverse based upon whether they look at the probability of winning or the potential payoff. =>Two preferences for the same options. This shouldn’t happen if principles of rationality are followed! Psychology of Judgment and Decision Making Scott Plous examines how people make judgments and decisions in the real world. Behavioral Decision Theory BDT is a revision of “rationality” as defined in classical economics Claims to better describe how people reason, think, and decide. Finds people systematically violate all of the assumptions of rationality (and by extension, classical economics) Herbert Simon: People are rational only to the extent that they don’t do things that harm their utility, . . .
. . .  success of the gun control laws, we need to compare the gun-related crime rates of the US with the laws, and the crime rates of the US without the laws. You can’t do both. Hidden or Absent Data Application: We see Vietnam as a disaster. But it may have been better than the alternative. But since the alternative didn’t happen, we cannot know. Application: Does the death penalty inhibit murder? We would need to compare murders committed and not committed under the death penalty and those committed and not committed w/o the death penalty. How do you count a crime not committed? Application: How well does the CIA do their job? We have information about threats to US securit . . .
. . .  the process of a group amplifying individual-level psych. effects. But, the research is relatively limited. Group Polarization Group polarization: the process of a group amplifying individual-level psychological effects. Choice Shift: Groups are more willing to take risks than individuals (“risky shift”) If groups are first predisposed toward caution, they’ll be come even more cautious. Initial leanings are key in juries. Prejudiced individuals’ biases are amplified in like-minded groups (like political parties!) Positive Group Effects Problem solving Groups solve problems better than individuals, particularly when a leader encourages everyone to share their ideas (Maier and Solem, 1952). Judgments Quantitative tasks: groups slightly more accurate than individuals Brain teasers and logic: Ditto General knowledge: Ditto Why did groups do better on this? Simple tasks: group size increases probability of having a member skilled in that area. Complex tasks: groups pooled resources and corrected . . .
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