Tversky & Kahneman (1981) - Jacket or calculator walk other side of town - save £5
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Reference Points in Judgments of Fairness
If outcomes are equal however judgements of fairness are not, reference points change e.g. less fair
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Endowment Effect
This bias occurs when we overvalue something that we own, regardless of its objective market value (Kahneman et al., 1991). example market stagnation - house prices
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Prospect Theory benefits
Predicts many aspects of human decision-making Explains why people often do not maximise utility
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Prospect theory limitations
primarily descriptive – it explains what decisions people make but not why It also doesn’t explain individual differences in preferences for risk
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Reasons and Decisions (Shafir, 1993)
The role of reasons in decision making is considered as it relates touncertainty, conflict, context effects, and normative decision rules.
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Disjunction Effect (Tversky & Shafir, 1992)
It’s harder to justify a decision when the reasons are uncertain - example of passing/failing exams and booking a holiday - People may make the same decision but for a different reason
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Sure Thing Principle
Savage (1954) If we prefer X to Y in any state of the world then we should prefer X to Y when the state of the world is uncertain The Disjunction Effect shows that people sometimes violate this principle
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Asymmetric Dominance (Huber, Payne & ****, 1982)
is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated.
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Paradox of Choice (Schwartz, 2004)
too much choice causes the feeling of less happiness, less satisfaction and can even lead to paralysis.
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Other cards in this set
Card 2
Front
Reference Points in Judgments of Fairness
Back
If outcomes are equal however judgements of fairness are not, reference points change e.g. less fair
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