Decision making

Welcome to the ninth episode of our course! This time, we delve into the complex world of *Decision-Making*. How do you choose what to eat for breakfast or decide on a career path? Building on our understanding of memory, attention, and problem-solving, we'll explore the cognitive processes behind our choices. You'll learn why we aren't always perfectly rational, discovering the concepts of bounded rationality and satisficing. We will uncover the mental shortcuts, or heuristics, that our brains use to navigate a complex world, and the systematic errors, or biases, they can lead to. Finally, we will explore the influential dual-process theory, which pits a fast, intuitive system against a slow, deliberate one. Get ready to understand the architecture of choice.

Check your understanding

These are the same multiple-choice questions you will see in the Quiz section after you listen to the episode. Use them here to preview or review the answers.

Herbert Simon's concept of 'bounded rationality' suggests that human decision-making is limited by which of the following factors?

  1. The finite time available to make a choice
  2. The inability to feel emotion
  3. Limited cognitive resources like memory and attention
  4. A lack of motivation
  5. The complexity of the decision-making environment

You hear a news report about a lottery winner and start believing your own chances of winning are higher than they actually are. This is a classic example of which heuristic?

  1. The Anchoring Heuristic
  2. The Representativeness Heuristic
  3. The Availability Heuristic
  4. The Framing Effect
  5. Satisficing

According to the Dual-Process Theory of cognition, which of the following characteristics are associated with System 2 thinking?

  1. Fast and automatic
  2. Effortful and deliberate
  3. Intuitive and emotional
  4. Requires focused attention
  5. Prone to using simple heuristics

The Representativeness Heuristic can lead to errors in judgment because we often...

  1. ignore base-rate statistical information.
  2. rely too heavily on the first piece of information received.
  3. judge things based on how well they match our stereotypes or prototypes.
  4. are swayed by the ease with which examples come to mind.
  5. search only for a 'good enough' solution.

A real estate agent first shows you a very overpriced house. Later, a less expensive (but still overpriced) house seems like a great deal in comparison. This tactic exploits which cognitive principle?

  1. Confirmation Bias
  2. Bounded Rationality
  3. The Availability Heuristic
  4. Anchoring and Adjustment
  5. Satisficing

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