100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Tversky and Kahneman Text - Summary $3.22
Add to cart

Summary

Tversky and Kahneman Text - Summary

 55 views  1 purchase
  • Course
  • Institution

UU Introduction to Economics and Business Economics - Summary for Tversky and Kahneman Text 'Judgment under Uncertainty'

Preview 1 out of 2  pages

  • May 28, 2020
  • 2
  • 2019/2020
  • Summary
avatar-seller
Summary – Judgment under Uncertainty – Tversky and Kahneman:
Heuristics and Biases (1974). Amos Tversky and Daniel Kahneman.
Biases in judgements reveal some heuristics of thinking under uncertainty.

Many decisions are based on beliefs concerning the likelihood of uncertain events 
expressed as odds or probabilities  limited validity.
People rely on heuristic principles which reduce the task of assessing probabilities and
predicting values  due to subjectivity and limited validity, this can lead to common biases.

There are main types of heuristics that are employed in making judgements under uncertainty
 lead to biases  these biases are enumerated.

Representativeness Heuristic  probabilities are evaluated by the degree to which A is
representative of / resembles B  assessing or ordering by the degree of similarity to a
stereotype (probability)  leads to errors, because probability ≠ similarity  the terms
named hereafter are factors that have no effect on representativeness but should have effect on
probability:
1) Prior probability of outcomes  when no specific evidence or explanation is given in
an experiment, prior probabilities are properly utilised (based on given information);
when (uninformative) evidence is given, they are ignored.
2) Sample Size  when subjects failed to appreciate the role of sample size, even when
it was emphasised in the formulation of the problem  neglect of sample size.
3) Chance  gambler’s fallacy  expectation that essential characteristics of a random
process will be represented (in each of its parts).
4) Predictability  only predicting in terms of favourableness of a description  no
regard for considerations of predictability.
5) Illusion of Validity  unjustifiable confidence of due to a fit between the output and
input  correlation decreases accuracy / probability, even as it increases confidence.
6) Regression towards the mean / average  value to recognise the import of regression
 the thought that punishment is more effective than a reward.

Availability  a useful clue for assessing frequency of a class  biases:
1) Retrievability of instances
2) Effectiveness of search set  neglecting the fact that different tasks draw more search
sets into existence.
3) Imaginability  incorrect evaluation of a frequency of classes.
4) Illusory correlation  co-occurring event  resistant to contradictory data.

Adjustment and Anchoring  situational estimates based on the formulation of an issue are
biased towards initially chosen values (chosen by computation)  underestimating
probabilities of failure in complex systems:
1) Insufficient Adjustment  when an initial value, chosen through wrong computation,
is given and not enough adjustment is made to it.
2) Conjunctive and Disjunctive events  conjunctive events are often overestimated,
while disjunctive events are underestimated.

Biases that occur due to the reliance on judgmental heuristics.
A better understanding of heuristics and their resulting biases could improve judgements and
decisions in situations of uncertainty.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller bjornlabrie. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $3.22. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

52510 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$3.22  1x  sold
  • (0)
Add to cart
Added