VO 3

Heristic Systems:

• Based on beliefs and experiences

• Failure leads to application of another cognitive model

Analytical Systems:

• Based on selection of information (informed decision) and application of logic

• Failure leads to change in the model or information selection

Heuristics = rule of thumb, simplification or educated guess that provides a guideline for a solution search

Heuristic Properties:

• Opportunity costs linked to negotiations

• Intuitive, emotional action

• Holistic approach of facing decisions

• Autonomous mechanisms operating in parallel fashion

• Efficient but not necessarily effective

• Approach of satisfying rather than optimal solution

Availability = the use of a rule that recently has been used successfully and/or is easily retrieved from memory

• Availability heuristic is the estimation of probability or frequency of an event that is based on the ease with which a person can recall their occurrences

• Is reasonable if the event occurrence depends on the same factors as in the past

• Judgment is based on one type of information ignoring contradictory information (occurrences vs. absence)

• Limitation of laboratory experiments

• Use of generalizations (stereotypes, prejudices)

• Decision based on a proportion of relevant information

• Verification of present information and relation to current situation (applicable?)

• Gathering new information (all relevant information included? Confirmation bias?)

Representativeness:

The representativeness heuristic is making judgments based on similarity of objects or events and ignoring information that makes these events’ occurrence less probable

• base-rate neglect

• the misconception of chance

• insensitivity to the sample size

Anchoring = an anchor is a salient value which is prominent but not necessarily pertinent to the choice of decision alternatives

• Awareness of anchoring effect

• Seeking as much verified information as possible

• Questioning given information and considering its impact on decisions

• Using anchors to the own advantage

Framing = logically equivalent descriptions of an option lead to different solutions

• Shapes our perception of people and events

• Focuses our attention on some aspects and excludes other (relevant) aspects

• Is used to organize information and formulate opinions

• Risky choice framing

• Attribute framing

• Goal framing

• Often frame positions in positive terms and highlight the opportunities for success

• Try to formulate the process in terms of gains and the counterparts as winners rather than losers

• Ask their counterpart for clarification and confirmation (attributes)

• Reformulate an offer received by the counterpart by contrasting frames (goal)

Decision Problem = a condition in which an information processing system has a goal that cannot be satisfied without engaging in a process that produces a goal-reaching alternative