Judgment and Decision Making Reflective Report

Week 6 Preference and Choice

Rational choice theory suggests that individual have preferences that are manifested in their behaviour. However, some researches suggest that individuals construct their preferences in process of thinking about their choice. (Slovic et al, 2006) We do make choices that are sometimes regretful if of course the wrong mode of evaluation is applied, that is the reason why we do sometimes spend enough time comparing between alternatives. Probability is taken into consideration for many decisions and the decision maker normally use expected value expected utility theory and this is in fact considered to be the most accurate choice strategy but also most effortful because it requires the use all information necessary and all alternatives.

It is believed that if the individual is aiming to achieve accuracy between alternatives they will require a considerable level of cognitive effort to do so. However, the studies with computer assimilation suggest that less effortless strategy cam also achieve accuracy but one should bear in mind that no single heuristics is accurate across all context. Kahneman and Tversky (1979) suggested that individuals evaluate outcomes as gains or losses from reference point which is normally the status quo. This generally means that individuals are loss averse and that losses appear larger than gains and most of our choices is evaluated in terms of their advantages and disadvantage relative to each other. (Hardman, 2009)