What is the difference between causality and attribution of causality?
What is the role of confidence in making a judgement?
What is intensity matching?
What is the connection between intensity matching and mental shotgun?
What is the Halo Effect?
What is a Confirmation Bias?
What are the results from Paul Meehl's study: "Clinical vs. Statistical Prediction: A Theoretical Analysis and a Review of the Evidence?" Why has this caused so much discussion?
What did the Princeton economist Orley Ashenfelter demonstrate with his wine study?
Why is the opinion of experts inferior to algorithms?
How should these insights into experts versus formulas be used for admissions decisions in academic programs?
What explains our hostility to judgements by algorithm?
If you had to hire a new team member for the garden section at Homedepot, how would you go about doing this in the light of this chapter's conclusions?
You are given $10,000 to invest into the stock market. How would you do this, taking the book's insights into consideration?
Explain the topics of discussion and the controversy between Kahnemann and Gary Klein.
How do people who want to become experts in a particular field acquire intuition?
What are the basic conditions to follow if you want to acquire a skill?
what did Kahneman learn from the group project to write a High School text book on judgement and decision making?
Under what circumstances should you get an outside opinion before you make a decision?
What is the planning fallacy and how can it be mitigated?
What is the engine of capitalism?
Choose a decision you made in your own life: how did you decide what to do? What factors influenced your choice? IN hindsight, wht do you think about this decision? What does it say about you, the decision maker?
Econs: “The agent of economic theory is rational, selfish, and his tastes do not change.” WHat is wrong with this definition?
What is psychophysics , and why is it important for Kahneman argument?
What was Bernoulli's error, and how did Kahneman respond to it?
What is Prospect theory?
How does loss aversion work in humans? How can it be measured?
What are some of the findings in the study of decision making that surprise you?
Can you relate the distinction between System 1 and 2 to the findings of prospect theory?
Explain the idea of theory-induced blindness with some examples.
What are some of the blind spots of prospect theory?
Explain and comment on the following statements from the book:
“It’s the familiar disaster cycle. Begin by exaggeration and overweighting, then neglect sets in.”
“We shouldn’t focus on a single scenario, or we will overestimate its probability. Let’s set up specific alternatives and make the probabilities add up to 100%.”
“They want people to be worried by the risk. That’s why they describe it as 1 death per 1,000. They’re counting on denominator neglect.”
If people are faced with choices that involve moderate or high probabilities, they tend to be risk-averse in the domain of gains and risk-seeking in the domain of losses. What are some examples of this typical behavior, and how would you explain it? Is this a rational approach to making choices?
What is the difference between broad and narrow framing, and how does it influence decision-making? Can you think of an example that demonstrates the differences?
The economist Paul Samuelson asked a friend whether he would accept a gamble on the toss of a coin, and the results got him to think about this further. What was so puzzling for him in the responses he got?
How should experienced stock traders approach risk? Can we generalize these rules - should everyone act similarly?
Under what circumstances should you buy extended warranties for items you purchase?
Kahneman asserts that money is not just a question of economic survival, but it also represents success and social value. "Money is a proxy for points on a scale of self-regard and achievement. These rewards and punishments, promises and threats, are all in our heads. We carefully keep score of them." How do you think about the social and reputational value of money?
Richard Thaler studied how humans use "mental accounts" to keep score and organize their lives (the idea is borrowed from accounting.) Mental accounting is often a case of narrow framing when it comes to decision making. What are Thaler's major findings in terms of using mental accounts for organizing our lives?
Kahneman writes: "Mental accounts come in several varieties. We hold our money in different accounts, which are sometimes physical, sometimes only mental. We have spending money, general savings, earmarked savings for our children’s education or for medical emergencies. There is a clear hierarchy in our willingness to draw on these accounts to cover current needs. We use accounts for self-control purposes, as in making a household budget, limiting the daily consumption of espressos, or increasing the time spent exercising. Often we pay for self-control, for instance simultaneously putting money in a savings account and maintaining debt on credit cards." Does this observation apply to your life, or to people you know well?
The disposition effect is an anomaly discovered in behavioral finance. It relates to the tendency of investors to sell assets that have increased in value, while keeping assets that have dropped in value. (see the book example.) How do you explain this effect?
Sunk cost fallacy: How does it work?
What does Kahneman mean by the "Fourfold pattern?"
Our decision are accompanied by many emotions; oftentimes it is regret or blame when we reflect on our choices in hindsight. What is the difference between regret and blame?
How is risk assessment and framing connected to system1/2?
What is more beneficial: Should cars be compared by using miles per gallon, or gallon per miles?
What did Amos and Kahneman demonstrate with the "Asian Disease Problem?"
Framing experiments reveal that risk-averse and risk-seeking preferences are not reality-bound. Preferences between the same objective outcomes reverse with different formulations. What does this mean for the validity of human judgement? What can you learn from it?
Frames are about descriptions of reality, not reality itself. A typical frame could be a guiding principle like "when in doubt, favor the poor." Moral sentiments are attached to it. But when we begin to test these judgments by changing the way problems are framed, we discover that there is no underlying consistency to this moral reasoning. Kahneman concludes: "Our preferences are about framed problems, and our moral intuitions are about descriptions, not about substance." Should you still hold on to your moral sentiments or easy judgements about the world? What kind of ethics follows from these insights?
How can we increase the number of organ donations in a country?
The rational agent model: Kahneman thinks that he has successfully debunked this standard economic assumption. WHat are his main arguments against it?
Many decisions we make cannot be quantified, and they are often not clear-cut. We even have a choice about making decisions: some people have a strategy of avoiding making choices, others make decisions too fast, or rely on others to make their decisions. The basic concepts that play a role in this process are the following: motivation, thinking, acting, strategy, decision, value, framing effect, reference point, desired outcome, evaluation. Create a diagram that relates these concepts, you can also bring in new terms if that helps. Use the following scenarios:
Getting a pet
Marrying someone