Judgment and Decision Making. How Rational Are We?. Normative Models. “Rational” = selecting optimally What gets optimized? 2 normative models: Expected Value : Highest monetary value Expected Utility : Highest psychological value
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How Rational Are We?
(each discussed in subsequent slides)
Which of each pair do you prefer?
Which of the two choices for treating an epidemic would you choose? (Tversky & Kahneman, 1981)
Without the new treatment, 700 soldiers will die
With the new treatment, there is a 70% chance that all of them will die, and a 30% chance that none will die.
Without the new treatment, 300 will be saved.
With the new treatment, there is a 70% chance that none of them will be saved, and a 30% chance that all of them will be saved.Framing Effects