3. Framing effects demonstrate that the outcome of a decision can be influenced by two factors: the background context of the choice and the way in which a question is worded. Framing effects are inconsistent when evaluating utilities. The error, from the normative model, is that the utility should be the same if the facts are the same, but this is not the case with framing effects. Framing effects can be illustrated in two separate problems that have the same deep structure – the amount lost or gained is the same. However, the amount seems bigger when expressed as a loss than when expressed as a gain. For example (list own personal example here).

4. According to the representativeness heuristic, we judge that a sample is likely if it is similar to the population from which the sample was selected. People tend to base their decisions on representativeness rather than actual probability. People also tend to ignore the base rate, or how often the item occurs in the population. When given a description of a man that is likely to be engineer, we will say that (because of the representative heuristic), he is more likely to be an engineer than a lawyer even if the population consists of 30 engineers and 70 lawyers. We also commit the conjunction fallacy – we judge the probability of the conjunction of two events to be greater than the probability of either of its constituent events. The combination of the two constituents makes the description seem more representative and plausible. (Give an example?)

5. According to the availability heuristic, we estimate frequency and probability in terms of how easy it is to think of examples of something. Recency plays a role in this heuristic – memory for items generally declines with the passage of time. Thus, we recall more recent items more accurately, and recent items are therefore more available. For example, if I’m currently overloaded with work from this quarter’s classes, I’m more likely to report that classes in general at UW give way too much homework. Familiarity also plays a role – we estimate higher frequencies of things that are more familiar to us. If I know many divorced individuals, I’m likely to estimate higher nation divorce rates (book example).