6. According to the anchoring and adjustment heuristic, we begin with a first approximation – an anchor – and then we make adjustments to that number on the basis of additional information. People tend to rely too heavily on the anchor, and adjustments are often too small. The anchoring and adjustment heuristic is often based on the availability heuristic because highly available information is likely to serve as an anchor. For example, when we meet someone from a particular group, we are likely to rely on stereotypes in order to create an initial anchor. Then we consider the unique characteristics of that individual and make some adjustments. Sometimes we may not make sufficiently large adjustments away from that initial anchor. We use this heuristic when estimating confidence intervals, or ranges within which we expect a number to fall a certain percentage of the time. We tend to make our confidence intervals way too narrow because, as stated earlier, our adjustments away from the anchor are way too small.

7. One assumption is that a perfect decision is always required. This would be good for, say, cancer treatments. However, an adequate decision is often fine. Normative model says that alternative and dimensions are static. In reality, information is dynamic. Normative model assumes that we have plenty of time to deliberate, which actually, in real life, decisions are made quite quickly (like in the situation of the fire commander). Normative model also assumes that all information is available simultaneously and that alternatives are mutually exclusive. Information is really, however, often incomplete and alternatives are not necessarily mutually exclusive. Normative model also assumes that decisions are self-contained. In real life, decisions are often part of action-feedback loops. Situation assessment is figuring out what the alternatives and what the dimensions are. NM emphasizes choice point – selecting among alternatives. In real life, when people have expertise (such as the fire commander), they only really consider one alternative.

8. Overconfidence means that people’s confidence judgments are higher than they should be, based on their actual performance on a task. People are often overconfident in estimating their future performance and even their assessment about other people. People also commit the planning fallacy – they typically underestimate the amount of time or money needed to complete a project; they also estimate that the task will be relatively easy to complete. This had certainly happened to me – before delving into an English paper, I completely underestimated that time it would take to finish it and was pretty stressed out at the last minute. This is related to decision making because it helps me choose to not allot as much time as I really need. Overconfidence is typically based on the following: 1) people are often unaware that their knowledge is based on very tenuous and uncertain assumptions or unreliable information; 2) examples for confirming our hypotheses is readily available, whereas we resist searching for counterexamples, 3) people have difficulty recalling different hypotheses, 4) when able to recall different hypotheses, people don’t treat them seriously, and 5) a self-fulfilling prophecy operates.