rational decision making
→ Traditional economic theory that people are rational actors
rational choice/public choice
→ people act based on their self interest
what does it mean to be a rational actor?
→ You are able to rank, order your preferences based on the expected utility of each
...
SPEA-V 185 Exam 2 Questions and
Answers 2024/2025
rational decision making
→ Traditional economic theory that people are rational actors
rational choice/public choice
→ people act based on their self interest
what does it mean to be a rational actor?
→ You are able to rank, order your preferences based on the expected utility of each
option.
→ These rank ordered preferences are stable and transitive.
→ Having perfect information about all alternative possibilities.
→ Maximize your utility
pure rationality
→ requires person to have complete information and to process this information in a
timely manner.
Bounded rationality
→ people do not have the capacity to be perfectly rational
→ the intuitive and emotionally based way that people react automatically. (thinking fast)
(more common) (used the most)
system 2
→ the deliberate, controlled, conscious, and slower way of thinking
prospect theory
→ people approach outcomes by assessing risk of the loss rather than possibility of the
gain
Satisfising
→ rather than trying to make the best decision possible, people try and make a decision
that is good enough.
Decoy effects
→ refer to situation where the selection can be influenced by including a clearly inferior
version of one of the choices
choice blindness
→ people will come up with reasons after the fact to make it seem like their decision was
based on some logical reason.
→ People defending a choice even though it was not the choice they made.
confirmation bias
→ people not only seek out information that supports their existing opinion, but they also
tend to ignore or discount information that challenges their belief.
→ Policymaking characterize by a series of decisions each instituting modest change
parallel processing
→ Dealing with several decisions simultaneously
Serial processing
→ Dealing with 1 problem at a time
→ (Humans can only engage in serial processing despite continued efforts to multitask)
Aspects of incrementalism
→ - Less work in looking at other kinds of decisions
→ - Less risk
→ - Consistent with principles of bounded rationality
→ - Politically expedient
→ -not expedient in situations where change is needed quickly
→ -does not answer the call to mass movements effectively
Punctuated equilibrium
→ Happens when attention of key decision makers becomes focused on a single issue or
problem
→ Generally happens when an issue hits a breaking point and attention shifts and
becomes proportionately focused
→ Some issues can't be solved incrementally
ONe important insight into group dynamics of decision-making
→ Inherent need for humans to be liked and positively viewed by peers.
→ Can be destructive in situations like peer pressure.
Ashe Confirmatory Experiment
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