Eman Test 2

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  1. Bounded awareness
    The process that prevents us from noticing useful, readily observable data that would be relevant to our decisions
  2. Why does bounded awareness occur?
    To cope with information overload
  3. Inattentional blindness
    Not seeing something because you aren't looking for it

    Ex. Invisible gorilla
  4. Change blindness
    Failing to notice a significant change; can be because change happens gradually

    Ex. Boiling frog
  5. Focusing illusion
    The exaggerated importance of a subset of relevant information and neglect of other available information

    Ex. Challenger disaster
  6. Irrelevant alternatives
    Inappropriate attention occurs when an alternative is offered that is obviously not the right one

    Ex. Weekend in Paris, Rome, or Rome without free coffee
  7. Bounded awareness in groups
    Groups tend to discuss and emphasize shared information and tend to ignore or deemphasize unshared information
  8. Monty Hall game
    Three doors, one proven to be empty, switch from original choice or stay (should switch)

    Demonstrates how naive misconceptions of probability lead to irrational choices
  9. Other bounded awareness phenomena
    • Misperception of impact of deadlines on negotiations
    • System neglect
    • Impact of third parties
  10. Winner's curse
    Tendency to overpay because of failure to accurately consider perspectives of other parties

    Ex. Auctions
  11. Framing
    Alternative wordings of the same information that significantly alter decisions despite no objective difference in the actual information

    Ex. At risk students for dropping out
  12. What do we pick in a gain frame?
    What do we pick in a loss frame?
    • Gain frame: certain option
    • Loss frame: risk-seeking mode
  13. Group decisions considered together vs. isolated, sequential decisions
    Reflect different preference patterns; isolated decisions tend to promote inconsistent preference patterns compared to combination decisions
  14. Certainty effect
    Providing certainty has a greater influence on our decisions than making the same numerical change in probability with other values
  15. Insurance
    A certain loss that is generally accepted as part of a decision process
  16. Acquisitional utility
    The utility to you of whatever product or service you acquire

    Ex. New phone vs. old phone
  17. Transactional utility
    The perceived quality of the deal relative to what you think the item should cost

    Ex. Beer at rundown store vs. at a fancy bar
  18. Endowment effect
    When there is a premium attached to the value of an item only because someone owned it before
  19. Mental accounting
    Mentally maintaining different categories of expenses or income and we may tend to use different decision rules for different accounts

    Ex. Trip to Europe
  20. Multiple smaller losses ___ more than than one larger loss.
    Multiple smaller gains ___ more than one larger gain.
    • Multiple smaller losses hurt more than than one larger loss.
    • Multiple smaller gains are appreciated more than one larger gain.
  21. Harms of omission vs. harms of commission
    Tendency to choose to not do anything that would harm a situation

    Ex. Vaccinations
  22. Omission bias
    Tendency to act to prevent harm due to commission while tolerating harms due to omission
  23. Status quo bias
    Tendency to act to preserve the status quo, because losses associated with changing things tend to be given more weight than the gains from the changes
  24. Regret in long term vs. short term
    Actions are regretted more in the short term but omissions are regretted more in the long term
  25. Rebates vs. bonuses
    • Rebates cause you to save more
    • Bonuses cause you to spend more
  26. Want vs. should
    Want option dominates one-at-a-time processes while should option dominates joint evaluations
  27. Evaluability
    Evaluation of hard to judge aspects are easier with a reference comparison so the difficult attribute carries less weight in joint evaluations
  28. Hedonic treadmill
    Where no amount of any "good" ever seems to be permanently satisfactory - we adapt to our increased wealth, take it for granted, and soon desire more
Card Set
Eman Test 2
This set of cards is for the second test in Engineering Management 313 at Missouri S&T.
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