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
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