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Prospect theory

Prospect theory
The paper "Prospect Theory: An Analysis of Decision under Risk"[1] has been called a "seminal paper in behavioral economics".[2] Model[edit] The formula that Kahneman and Tversky assume for the evaluation phase is (in its simplest form) given by where is the overall or expected utility of the outcomes to the individual making the decision, are the potential outcomes and their respective probabilities. is a function that assigns a value to an outcome. is a probability weighting function and captures the idea that people tend to overreact to small probability events, but under react to large probabilities. Example[edit] To see how Prospect Theory can be applied, consider the decision to buy insurance. 1. 2. These expressions can be computed numerically. in losses, and hence the insurance looks unattractive. In this example, a strong overweighting of small probabilities undo the effect of the convexity of in losses: the potential outcome of losing $1,000 is overweighted. Applications[edit]

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Analysis paralysis Analysis paralysis or paralysis by analysis is an anti-pattern, the state of over-analyzing (or over-thinking) a situation so that a decision or action is never taken, in effect paralyzing the outcome. A decision can be treated as over-complicated, with too many detailed options, so that a choice is never made, rather than try something and change if a major problem arises. A person might be seeking the optimal or "perfect" solution upfront, and fear making any decision which could lead to erroneous results, when on the way to a better solution. The phrase describes a situation where the opportunity cost of decision analysis exceeds the benefits that could be gained by enacting some decision, or an informal or non-deterministic situation where the sheer quantity of analysis overwhelms the decision-making process itself, thus preventing a decision.

Waking Up At 4:30 For 21 Days On April 2, I put myself to a new challenge. It was one of the biggest life hacks I’ve ever done. The challenge was simple: waking up 21 consecutive workdays at 4:30 a.m., a challenge I gave the name of #21earlydays. I was already used to waking up early (6 a.m. almost every day), but this time I wanted to go further. I wanted to test myself and be more aware of my own limits. And at the same time, my idea was to share my progress with the world and try to change some preconceived ideas that society obliges us to follow. Prospect Theory Explanations > Theories > Prospect Theory Description | Research | So What? | See also | References Description We tend to value a gain that is certain more than a gain that is less than certain, even when the expected value of each is the same.

Critical thinking Critical thinking is a type of clear, reasoned thinking. According to Beyer (1995) Critical thinking means making clear, reasoned judgements. While in the process of critical thinking, ideas should be reasoned and well thought out/judged.[1] The National Council for Excellence in Critical Thinking defines critical thinking as the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action Framing (economics) In the social sciences, framing is a set of concepts and theoretical perspectives on how individuals, groups, and societies organize, perceive, and communicate about reality. Framing is the social construction of a social phenomenon often by mass media sources, political or social movements, political leaders, or other actors and organizations. It is an inevitable process of selective influence over the individual's perception of the meanings attributed to words or phrases. It is generally considered in one of two ways: as frames in thought, consisting of the mental representations, interpretations, and simplifications of reality, and frames in communication, consisting of the communication of frames between different actors.[1] The effects of framing can be seen in many journalism applications.

Cognitive traps for intelligence analysis This article deals with a subset of the intellectual process of intelligence analysis itself, as opposed to intelligence analysis management, which in turn is a subcomponent of intelligence cycle management. For a complete hierarchical list of articles in this series, see the intelligence cycle management hierarchy. Intelligence analysis is plagued by many of the cognitive traps also encountered in other disciplines. The first systematic study of the specific pitfalls lying between an intelligence analyst and clear thinking was carried out by Dick Heuer.[1] According to Heuer, these traps may be rooted either in the analyst's organizational culture or his or her own personality.

T540p Intel HD Graphics Brighness and Sleep not wo... - Page 2 I got a brand-new Thinkpad T540p (64-bit Win7, 1920 x 1080 display) three days ago and it’s great except that each time it goes to Sleep or Hibernates there’s a roughly one-in-three chance that it will lock up and need a forced shut down. The brightness control works ok and this is Windows 7, not Windows 8. The drivers are all up-to-date according to Lenovo (I’ve done their recommended updates) but do you think this could be the same problem as described in this thread? Sometimes it freezes in the act of going to Sleep and other times it freezes on waking up.

Framing explained Framing (F) is focusing the attention of people within a field of meaning. Tversky and Kahneman should be seen as the founders of framing theory, although Fairhurst and Sarr actually coined the term. Contrary to the central concept of of rational choice theory (people always strive to make the most rational choices possible), Framing theory suggests that how something is presented (the “frame”) influences the choices people make. Frames are abstract notions that serve to organize or structure social meanings. Frames influence the perception of the news of the audience, this form of agenda-setting not only tells what to think about an issue (agenda-setting theory), but also how to think about that issue. F is a quality of communication that leads others to accept one meaning over another.

A mechanism for social selection and successful altruism Within the framework of neo-Darwinism, with its focus on fitness, it has been hard to account for altruism behavior that reduces the fitness of the altruist but increases average fitness in society. Many population biologists argue that, except for altruism to close relatives, human behavior that appears to be altruistic amounts to reciprocal altruism, behavior undertaken with an expectation of reciprocation, hence incurring no net cost to fitness. Herein is proposed a simple and robust mechanism, based on human docility and bounded rationality that can account for the evolutionary success of genuinely altruistic behavior.

Live Internet Talk Radio Join us every Monday at 2pm ET. When you tune into The Million Dollar Mindset with Marla Tabaka, you will hear powerful and inspiring stories, learn proven tips and tricks to building a successful business, and unlock the secrets to creating a happier, more balanced life through abundant thinking and attraction power. Marla's guests are success-minded individuals who have attained the things that are most important to them in life and business. Marla and her guests credit their success to positive thought and taking inspired action. They are ready to share their insights, secrets, and dreams with you!

Framing Explanations > Theories > Framing Description | Research | Example | So What? | See also | References Description Predictably Irrational Predictably Irrational: The Hidden Forces That Shape Our Decisions is a 2008 book by Dan Ariely, in which he challenges readers' assumptions about making decisions based on rational thought. Ariely explains, "My goal, by the end of this book, is to help you fundamentally rethink what makes you and the people around you tick. I hope to lead you there by presenting a wide range of scientific experiments, findings, and anecdotes that are in many cases quite amusing. Once you see how systematic certain mistakes are--how we repeat them again and again--I think you will begin to learn how to avoid some of them".[1] The book is unique in that it offers a down-to-earth descriptions of rigorous academic research that is described in a very appealing and accessible manner. Chapter summary[edit] Ariely discusses many modes of thinking and situations that may skew the traditional rational choice theory.

Online advertising In 2011, Internet advertising revenues in the United States surpassed those of cable television and nearly exceeded those of broadcast television.[1]:19 In 2013, Internet advertising revenues in the United States totaled $42.8 billion, a 17% increase over the $36.57 billion in revenues in 2012.[2]:4–5 U.S. internet ad revenue hit a historic high of $20.1 billion for the first half of 2013, up 18% over the same period in 2012.[3] Online advertising is widely used across virtually all industry sectors.[1]:16 Many common online advertising practices are controversial and increasingly subject to regulation. Online ad revenues may not adequately replace other publishers' revenue streams. Declining ad revenue has led some publishers to hide their content behind paywalls.[4] History[edit]