TED-Ed: The psychology behind irrational decisions - Sara Garofalo

The video explores decision-making through scenarios involving bonuses and penalties, highlighting the concept of loss aversion. It explains how loss aversion, a cognitive bias, affects our choices by making losses feel more impactful than equivalent gains. The video also delves into heuristics, mental shortcuts that can lead to errors like the conjunction fallacy and anchoring effect. While heuristics have historically aided quick decision-making, they can result in biased choices in complex modern contexts. The video encourages awareness of these biases to improve decision-making.

In the decision-making scenario presented, why do people often choose the guaranteed bonus in the first round?

• Due to the conjunction fallacy

• Due to loss aversion

• Because they prefer uncertainty

• Because they are risk-seeking

What is the conjunction fallacy as explained in the video?

• Choosing a more complex option over a simpler one

• Believing a specific condition is more probable than a general one

• Preferring a guaranteed outcome over a risky one

• Overestimating the likelihood of rare events

How does the anchoring effect influence decision-making?

• By making people underestimate probabilities

• By causing people to rely on initial information

• By encouraging people to take more risks

• By leading people to ignore past experiences

Why have heuristics been beneficial throughout human history?

• They allow for detailed analysis of all options

• They help in making quick decisions with limited information

• They eliminate all forms of cognitive biases

• They ensure decisions are always rational

What is a recommended approach when faced with decisions involving numbers and probabilities?

• Rely solely on past experiences

• Pause and reconsider the intuitive answer

• Always trust your intuition

• Ignore all numerical data