I want to buy a car. I only have X amount of dollars and for that amount I can buy either of two cars. One car uses less gas and has a good repair record. The other car uses more gas and, according to Consumer Reports, is more prone to repairs (but not major ones); however this second car is rated as the most safe in its' price range and is very seldom stolen.

Which Car should I buy?

Do I work as a logical totally rational decision maker: Do I identify the dimensions of importance, give a weighting to each, and work out a formula that would give me the most gain and the least cost?

Do people maximize use of available information?
That is, given a set of alternatives, do people make the best choice?

Normative Approach:

can calculate Expected Value

if given 2:1 odds on a horse that has a probability=0.80 of winning the raise

what is the expected value of betting $100
 

E.V.	= (0.80 X 200)-(O.2 X 100) = 160-20 =$ 140.00

These heuristics (as with the ones identify by Newell and Simon) have the following properties

Gain: reduce cognitive load; usually lead to a good choice

Cost: can lead to an inaccurate or poor choice (even when heifer choices are available)

Question: Rank order the following the number of people who die of each of the following; airplane crashes, bee stings, AIDs, Cancer ....

How do people make decisions of this sort (and note: these are often the type of question asked in polls, that direct public policy)

The availability heuristic: use ease of accessing information from memory as a means of estimating the "right" answer

Problems:
factors that lead to greater access can lead to inaccurate judgments

example: Familiarity effects
example: Vividness or saliency Effects

example: anchoring effects; what is the proportion of African Nations in the U.N.?
-roll an random number generator: is the number above or below that estimate

-note: Caskets

Question:
1 would you be more upset if you

-missed catching an airplane by 5 minutes
-missed catching an airplane by 45 minutes

Note: in consumer research
-getting people to buy cable services

condition 1: provide people with a set of facts of why they should get Cable TV

condition 2: ask people to provide own scenarios about why it would be good to get cable TV

-measure how positive they feel about Cable
-in a 3 month follow up, see who buys the Cable service

Is Linda:
a feminist
a bank teller
a feminist bank teller

Heuristic: treat an instance as representative of a category

-expect that each instance will ill have the properties of the category

-note: problem of sample size

example: if you toss a fair, unbiased coin 6 times in a row which of the following two outcomes is more likely

1. H H H T T T
2. H H T H T T

-work as if the category should have the property of the instance
-people do this even if they are told that the instance is NOT typical

example; think back to my wanting to buy a car:

I go to consumer reports and other sources,and on the bases of that research want to buy a car. I mention that to my father, who tells me: Are you nut's, A friend of mine just bought that type of car, and he has had nothing but problems? Why should this report of 1 case be so important?

-example: car seats

Imagine that Canada is preparing for the outbreak of a new disease, which is expected to kill 600 people

Two alternatives have been suggested in lab work
A: 200 people saved
B: 1/3 probability that all 600 people will be saved, but a 2/3 probability that none of the 600 will be saved

Contrast this with these alternatives
A: 400 will die
B: 1/3 probability that no one will die but a 2/3 that all of the 600 will die