Im now writing up what we did on the two last weeks in the class where everyone in the class was doing group presentation. Some of the presentation done by other groups member in the class where very interesting. My group presented in week 11, and I must say I was very nervous, but overall our presentation went well even though we could have done much better. Today is the deadline for the second group work, which was interesting to write about. We concluded 4 different papers about individual differences in decision making.
Overall this module were very interesting and different from other modules we previously done.
Friday 15 January 2010
Wednesday 16 December 2009
Week 9
Week 9
This week we didn’t have any class but we have drop in session, if we needed to see David regarding our presentation on week 11. As a group we are assigned to present this article: Cokely, E.T., & Kelley, C.M. (2009). Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation. Judgment and Decision Making, 4 (1), 20-33. My group came in that Friday to have a quick chat with David about the presentation. Afterwards we had a small meeting, that we discussed about the presentation and we also decided what everyone is doing.
Am little anxious about the presentation, because I really get nervous standing in front of people, but hopefully it will go good.
This week we didn’t have any class but we have drop in session, if we needed to see David regarding our presentation on week 11. As a group we are assigned to present this article: Cokely, E.T., & Kelley, C.M. (2009). Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation. Judgment and Decision Making, 4 (1), 20-33. My group came in that Friday to have a quick chat with David about the presentation. Afterwards we had a small meeting, that we discussed about the presentation and we also decided what everyone is doing.
Am little anxious about the presentation, because I really get nervous standing in front of people, but hopefully it will go good.
Week 7 & 8
On week 7 we did not have any formal class as David were attending a conference in Boston, but our midterm coursework was due in that Friday however it was changed to the following week because many students found it both difficult and confusing. The main confusion was due to the way we were handing in our coursework, I think because it was different from the normal way we are used to handing in coursework. So during the week we were working on our coursework.
On week 8, we had review session, going through all the topic we have done previous weeks. We got the chance to discuss different topics among the students, and ask David if any clarification needed.
On week 8, we had review session, going through all the topic we have done previous weeks. We got the chance to discuss different topics among the students, and ask David if any clarification needed.
Week 6
Week 6
This week we were told to read the article: “Neoclassical theory versus prospect theory: Evidence from the market” by John A, List. This article examined endowment effect on consumer in Market place, by testing neoclassical theory against prospect theory. Previous studies has shown that preferences are not independent of current entitlements and a study conducted by Knetsch (1989) showed that participants were more likely to keep their endowed goods (L, A., John 2004). However the evidence done so fare favor prospect theory but some economist has argued that endowment effect is due to mistake made by inexperienced consumers and through time and experiences they are more likely to match predictions from neoclassical model. Recent experiments done on endowment effect supported this theory, for instance List (2003) study examined trading rates of sport memorabilia in an actual marketplace, and observed low number of trades made by inexperienced which consisted with prospect theory, but individual behavior approaches neoclassical expectations as market experience intensifies (List 2004). This findings suggest that behavior does change among inexperience and experience traders, but however some important questions rise from this studies because List 2003 was not mainly interested in testing the major theories. His study did not properly distinguished between prospect theory and neoclassical theory because experienced agents may have planned on reselling the good. This is a important factor as Kahneman, Knetsch and Thaler (1990) stated that there are some cases in which no endowment effect would be expected when goods are bought for resale purposes rather then for utilization. This study took into account all issues by conducting experiment within a well-functioning marketplace. The advantages of conducting this experiment in natural occurring environment is that people will still engage in market activities such as buying and selling regardless of the experiment. This study used more familiar goods such as chocolate bars and mugs. This study found overall strong support for prospect theory within inexperienced consumers, and for those consumers that had a considerable amount of exchange opportunity in the marketplace, neoclassical theory predicts reasonably well, evidence that behavior approaches the neoclassical prediction for experienced agents (List 2004).
This week we were told to read the article: “Neoclassical theory versus prospect theory: Evidence from the market” by John A, List. This article examined endowment effect on consumer in Market place, by testing neoclassical theory against prospect theory. Previous studies has shown that preferences are not independent of current entitlements and a study conducted by Knetsch (1989) showed that participants were more likely to keep their endowed goods (L, A., John 2004). However the evidence done so fare favor prospect theory but some economist has argued that endowment effect is due to mistake made by inexperienced consumers and through time and experiences they are more likely to match predictions from neoclassical model. Recent experiments done on endowment effect supported this theory, for instance List (2003) study examined trading rates of sport memorabilia in an actual marketplace, and observed low number of trades made by inexperienced which consisted with prospect theory, but individual behavior approaches neoclassical expectations as market experience intensifies (List 2004). This findings suggest that behavior does change among inexperience and experience traders, but however some important questions rise from this studies because List 2003 was not mainly interested in testing the major theories. His study did not properly distinguished between prospect theory and neoclassical theory because experienced agents may have planned on reselling the good. This is a important factor as Kahneman, Knetsch and Thaler (1990) stated that there are some cases in which no endowment effect would be expected when goods are bought for resale purposes rather then for utilization. This study took into account all issues by conducting experiment within a well-functioning marketplace. The advantages of conducting this experiment in natural occurring environment is that people will still engage in market activities such as buying and selling regardless of the experiment. This study used more familiar goods such as chocolate bars and mugs. This study found overall strong support for prospect theory within inexperienced consumers, and for those consumers that had a considerable amount of exchange opportunity in the marketplace, neoclassical theory predicts reasonably well, evidence that behavior approaches the neoclassical prediction for experienced agents (List 2004).
Saturday 12 December 2009
Week 5
Week 5
This week we were told to read: “Deep thoughts and Shallow Frames: On the Susceptibility to framing Effects” This article were very interesting to read as it pointed out very important topic not only in psychology but in everyday life. Framing effect is one of the cognitive biases which presents the same option but in different formats which then could affect people’s decisions. Manipulating decision frames has been found to affect choices in medicine, voting, public goods allocation, gambling and consumer judgment.
Tversky & Kahneman, 1981 said that framing effects occur whenever alternative descriptions of what is essentially the same decision problem give rise to predictably different choices. Sieck & Yates 1997, Smith 1985 argued that framing effect occurs whenever people make a decision without giving much of attention, and framing effect would occur less if people thought more carefully about their choices. A classic example is the Asian Disease with both negative and positive frames. Within positive frames there is two alternative and the sure options is preferred rather then risky option. Because the sure option will save 200 people, whereas the second option gives a one-third probability of saving everyone and two-third of 600 people dying. Due to framing effect the first option sounds better whereas in reality this two option are the same but they are framed in different ways. Within the negative frames people choose the risky option because the sure option 400 people will die. These two different scenario reflect the prospect theory were decision makers become risk seeking when faced with loss and risk averse when the sure option is perceived as gain. However this clash with the rational theory whereby the fundamental tenets is that decision remain invariant across logically equivalent methods of elicitation and across logically equivalent descriptions of the options (Tversky & Kahneman 1986). Some studies has shown that framing effect reduce when participants asked to justify their choices but only after spending 50 minutes to make a decision (Sieck & Yates 1997). Nevertheless other studies on framing effect has shown that framing effect do still occur even if they justify their choices, such as study conducted by Faglet and Miller (1987) and Levin and Chapman (1990). Although the fact that the evidence based on framing effect is mixed and very limited, many researchers tend to support the fact that more thoughts given to a problem reduces the likelihood of framing effect. In this paper study 1 was carried out in Princeton University with three hundred and sixty-five undergraduate students to investigates framing effect. They investigated different framing problems by measuring ‘Need for Cognition’ and justification, but did not report any framing effect reduction. In study 2 two hundred and ninety-two students from Princeton University participated and this time only two framing problems was used. The findings on this study predict important result as those higher in NC were more likely to make choices consistent with their earlier responses than those with lower in NC.
However it demonstrated that overall the initial influence of framing effect is not avoided, but people in high NC are more likely to notice the potential for violating the principle of invariance. This paper was very interesting to read and very beneficial overall, and I have seen in different cases where by I choose different option based on the way its framed, but then I did not know about the framing effect at least I know now.
This week we were told to read: “Deep thoughts and Shallow Frames: On the Susceptibility to framing Effects” This article were very interesting to read as it pointed out very important topic not only in psychology but in everyday life. Framing effect is one of the cognitive biases which presents the same option but in different formats which then could affect people’s decisions. Manipulating decision frames has been found to affect choices in medicine, voting, public goods allocation, gambling and consumer judgment.
Tversky & Kahneman, 1981 said that framing effects occur whenever alternative descriptions of what is essentially the same decision problem give rise to predictably different choices. Sieck & Yates 1997, Smith 1985 argued that framing effect occurs whenever people make a decision without giving much of attention, and framing effect would occur less if people thought more carefully about their choices. A classic example is the Asian Disease with both negative and positive frames. Within positive frames there is two alternative and the sure options is preferred rather then risky option. Because the sure option will save 200 people, whereas the second option gives a one-third probability of saving everyone and two-third of 600 people dying. Due to framing effect the first option sounds better whereas in reality this two option are the same but they are framed in different ways. Within the negative frames people choose the risky option because the sure option 400 people will die. These two different scenario reflect the prospect theory were decision makers become risk seeking when faced with loss and risk averse when the sure option is perceived as gain. However this clash with the rational theory whereby the fundamental tenets is that decision remain invariant across logically equivalent methods of elicitation and across logically equivalent descriptions of the options (Tversky & Kahneman 1986). Some studies has shown that framing effect reduce when participants asked to justify their choices but only after spending 50 minutes to make a decision (Sieck & Yates 1997). Nevertheless other studies on framing effect has shown that framing effect do still occur even if they justify their choices, such as study conducted by Faglet and Miller (1987) and Levin and Chapman (1990). Although the fact that the evidence based on framing effect is mixed and very limited, many researchers tend to support the fact that more thoughts given to a problem reduces the likelihood of framing effect. In this paper study 1 was carried out in Princeton University with three hundred and sixty-five undergraduate students to investigates framing effect. They investigated different framing problems by measuring ‘Need for Cognition’ and justification, but did not report any framing effect reduction. In study 2 two hundred and ninety-two students from Princeton University participated and this time only two framing problems was used. The findings on this study predict important result as those higher in NC were more likely to make choices consistent with their earlier responses than those with lower in NC.
However it demonstrated that overall the initial influence of framing effect is not avoided, but people in high NC are more likely to notice the potential for violating the principle of invariance. This paper was very interesting to read and very beneficial overall, and I have seen in different cases where by I choose different option based on the way its framed, but then I did not know about the framing effect at least I know now.
Saturday 21 November 2009
Week 4
Week four was about decision making under risk and uncertainty, as a group we were told to read the: The priority heuristic: making choice without trade-offs. To understand this article I read chapter 7 in Davids book and it simplified the subject. The start of the lecture David went to explain generally what decision making is all about and how people tend to make decision under risk and uncertainty. He also gave us some examples in gambling, how people tend to be more risk aversion when faced with options that has sure amount of money, but again in second alternative people becomes more risk seeking when presented with less money for certain. Then we further went into expected utility theory which means that we consider our wealth whenever we are making any decisions. The article we read were testing how accurately the heuristic predicts people’s choices, compared to previously proposed heuristics. According to Branstatter, E., and Gigerenzer, G., (2006), the reason for choosing are often negatively correlated with one another, high returns go with low probabilities, and low returns go with high probabilities, and Shanteau & Thomas, 2000 suggest that negative correlations between reasons cause people to experience conflict, leading them to make trade-offs. The topic of this week were very interesting as we face decision making during our daily life, and the decision we make is informed by our judgment. We were told to do an exercise to measure our utility. This two graphs show certainty and probability equivalence.
In my two graphs it shows that am risk averse when it comes to high amount of money, but again am risk seeking if the money i have is small and the winning price is higher. Which I think is common behavior among people generally, however it might differ for gamblers.
In my two graphs it shows that am risk averse when it comes to high amount of money, but again am risk seeking if the money i have is small and the winning price is higher. Which I think is common behavior among people generally, however it might differ for gamblers.
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