Cognitive Biases in Decision Making

Which of the following best describes the concept of "bounded rationality" in decision making?

• The idea that individuals have unlimited cognitive resources to make decisions.

• The notion that decision-making is limited by the information available, cognitive limitations, and time constraints.

• The theory that people always make the most rational and optimal decisions.

• The belief that emotions do not influence decision-making processes.

What is the "availability heuristic" in the context of decision making?

• A mental shortcut that relies on immediate examples that come to a person's mind.

• A strategy where people make decisions based on the most recent information.

• A method of decision making that involves evaluating all possible options.

• A process where decisions are made based on statistical data.

In decision making, what does the term "confirmation bias" refer to?

• The tendency to seek out information that contradicts one's pre-existing beliefs.

• The inclination to interpret new evidence as confirmation of one's existing beliefs or theories.

• The practice of making decisions based on random chance.

• The habit of considering all possible outcomes before making a decision.

Which of the following is an example of "anchoring" in decision making?

• Making a decision based on the first piece of information encountered.

• Ignoring initial information and focusing on new data.

• Making decisions based on emotional responses.

• Using statistical analysis to make a decision.

What does the "prospect theory" suggest about decision making?

• People are risk-averse when it comes to potential gains and risk-seeking when it comes to potential losses.

• Individuals always make decisions that maximise their utility.

• Decision making is always rational and logical.

• People make decisions based solely on past experiences.

What is "overconfidence bias" in decision making?

• The tendency to underestimate one's own abilities.

• The tendency to overestimate one's own abilities and the accuracy of one's knowledge.

• The habit of making decisions based on other people's opinions.

• The practice of always doubting one's own decisions.

Which of the following best describes "loss aversion" in decision making?

• The tendency to prefer avoiding losses over acquiring equivalent gains.

• The preference for taking risks to achieve gains.

• The inclination to make decisions based on potential gains rather than losses.

• The habit of ignoring potential losses when making decisions.

What is the "representativeness heuristic" in decision making?

• A mental shortcut where people classify something according to how similar it is to a typical case.

• A strategy where decisions are made based on the most recent information.

• A method of decision making that involves evaluating all possible options.

• A process where decisions are made based on statistical data.