1. What is loss aversion?
- The tendency for compulsive gambling to start after a traumatic loss type event
- Perceiving probability in a highly subjective manner, overestimating the chances of low probability events, and underestimating high ones
- The tendency for people to strongly prefer avoiding loss than acquiring gains
- The tendency for people to strongly acquiring gains than avoiding loss
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2. What is a heuristic?
- A trust game played between two pps
- A mental shortcut that allows people to make mental judgements quickly and efficiently
- 'Fast and frugal' judgments that are only made by humans
- Receiving a positive reward after avoiding a stimulus
3. What is the decoy effect?
- Presentation of another option that is inferior in all respects has shown to influence preference
- Preference for current state of affairs
4. What is the framing effect?
- When the objective value exceeds that of the expected utility
- People tend to avoid risk when a positive frame is presented, but sees risk more when a negative frame is presented (even when options are the same! For example saving people, or killing people in vaccine example).
- People tend to avoid risk when a negative frame is presented, but sees risk more when a positive frame is presented (even when options are the same! For example saving people, or killing people in vaccine example).
- When the expected utility exceeds the objective value
5. What is temporal discounting?
- The tendency for people to discount rewards as they approach a temporal horizon in the future or the past (i.e., become so distant in time that they cease to be valuable)
- The tendency for people to discount rewards that occur closely on the temporal horizon i.e available closer to 'now' as they will have higher cumulative effects in the future