2,320 research outputs found

    The Mediating Effect of Representativeness Heuristic on Neurofinance and SME's Financial Decision Making

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    Financial decision-making is a crucial part of business survival, especially among SMEs. About 95% of the business are facing failures within five-year time. The financial decision making failure happened due to psychology and behavioural. This research aims to determine the mediating effect of representativeness heuristic on emotions and financial decision making. A pre-test and post-test experiment analyzes emotions, financial decision-making, and representativeness heuristic behaviour. In pre-testing, emotions and financial decision-making questionnaires are measured using questionnaires distributed to forty-two SMEs. Then, the video clips with 12 to 16 minutes duration are used in manipulating the emotions from neutral emotion to positive and negative emotions. Lastly, in post-testing, the data are gathered by repeating answered emotion and financial decision-making questionnaires, followed by the representativeness heuristic questionnaire. The data were analysed using General Linear Regression. The results showed that representativeness heuristic is partially effect on negative emotion towards financial decision making. From the analysis, neuro-behavioural of financial decision-making model has been proposed. The proposed models are incorporating with the brain components and working memory. It shows that System 1 and System 2 of the dual-process theory are activated for negative and positive emotions

    The Effect of working memory and math ability on decision making

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    Previous research has indicated that people use various strategies when making decisions. A majority of the research has involved the idea that people use a heuristic when making decisions. Kahneman and Tversky have illustrated that there are instances that people respond with an answer that appears to be indicative of usage of the representativeness heuristic. One of the purposes of the current paper is to gain insight into the actual strategies that are used in these instances. Another purpose of the current experiment is to see if math ability and working memory capacity influence the strategy that a person selects to use. Experiment 1 indicated that people were more accurate on these tasks than expected. On certain tasks, it appears that participants found a simpler strategy than the representativeness heuristic that produces an accurate answer. In experiment 2, the stimuli were adjusted to make sure that the simpler strategy would not work on all trials. The reaction time and response data indicated that the representativeness heuristic was used when other strategies failed to produce a definitive answer. It was also found that the participants who were worse at math defaulted to the representativeness heuristic when the simpler strategy did not result in a definitive answer and that the participants who were better at math were more likely to respond with the correct answer regardless of whether or not the simpler strategy resulted in a definitive answer

    Disentangling the representativeness heuristic from the availability heuristic

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    Tese de doutoramento, Psicologia (Cognição Social), Universidade de Lisboa, Faculdade de Psicologia, 2015Most judgments, predictions and decisions rely on simplifying reasoning heuristics, such as representativeness and availability heuristics. Representativeness heuristic relies on a judgment of similarity between a categorical prototype and a target. Availability heuristic relies on the accessibility of instances. A crucial assumption of Heuristics and Biases research program (Tversky & Kahneman, 1974) was that systematic and characteristic biases were unmistakably associated with each heuristic. Unfortunately, often the same biases can be explained by different heuristics (e.g., Anderson, 1990; Gigerenzer, 1991). This problem is particularly striking in the case of availability and representativeness. The main goal of this dissertation is to conceptually clarify and empirically disentangle these heuristics, thus defining conditions for the use of one or the other. This dissertation explores three variables that have the potential to determine when people will use representativeness or availability: the level of construal, the computational speed of the heuristics, and directional motivation. The first empirical chapter (Chapter II) explores whether the representativeness heuristic relies on more abstract information than the availability heuristic, and uses the construal level theory (e.g., Trope & Liberman, 2000) as a framework to explore and manipulate different levels of abstraction. Chapters III and IV explore whether representativeness heuristic takes longer to compute using a paradigm about predictions of binary random events, where both heuristics can be applied in the same judgment. The last empirical chapter (Chapter V) explores the role of directional motivation on the heuristic processes. The motivation to observe a certain outcome should affect people’s representation of a target event, and consequently lead to self-serving predictions. The role of directional motivation is thus discussed as a variable that could be used in order to determine the use representativeness or availability heuristic. The consequences of the proposed differences between representativeness and availability, for psychological models of judgment and decision making are discussed.Muitos julgamentos, previsões e decisões são tomadas com base em heurísticas de julgamento como as heurísticas da representatividade e da disponibilidade. A heurística da representatividade baseia-se num julgamento de semelhança entre um protótipo e o alvo. A heurística da disponibilidade baseia-se na acessibilidade de ocorrências específicas. Um ponto essencial do programa Heuristicas e Enviesamentos (Tversky & Kahneman, 1974) seria que enviesamentos específicos e sistemáticos estariam inequivocamente associados a diferentes heurísticas. Infelizmente, muitas vezes o mesmo enviesamento poderia ser explicado por diferentes heurísticas. Este problema é particularmente grave no caso da representatividade e da disponibilidade. O objectivo desta tese é clarificar e dissociar empiricamente estas heurísticas, definindo, assim, condições para o uso de uma ou da outra. Esta tese explora três variáveis que poderão ajudar a determinar quando usamos a heurística da representatividade ou da disponibilidade: nível de abstracção; velocidade computacional e motivação direccional. O primeiro capítulo empírico (Capítulo II) explora se a heurística da representatividade depende de informação mais abstracta que a heurística da disponibilidade, partindo da “construal level theory” (e.g., Trope & Liberman, 2000) para explorar e manipular níveis de abstracção. Os Capítulos III e IV exploram se a heurística da representatividade demora mais tempo a ser computada que a heurística da disponibilidade quando ambas as heurísticas podem ser aplicadas a uma tarefa de previsão binária de eventos aleatórios. O Capítulo V explora o papel da motivação para observar um resultado nos processos heurísticos. O desejo de observar determinado resultado deverá afectar a representação dos eventos e levar a prever o resultado que se deseja observar. O potencial papel da motivação direccional na determinação do uso das heurísticas da representatividade ou da disponibilidade é discutido.Fundação para a Ciência e a Tecnologia (FCT), SFRH/BD/73378/201

    The Effects of Total Sleep Deprivation on Bayesian Updating

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    Recent evidence suggests that nearly 25% of U.S. adults (47 million) suffer from some level of sleep deprivation. The impact of this sleep deprivation on the U.S. economy includes direct medical expenses related to sleep deprivation and related disorders, the cost of accidents, and the cost of reduced worker productivity. Sleep research has examined the effects of sleep deprivation on a number of performance measures, but the effects of sleep deprivation on decision-making under uncertainty are largely unknown. In this article, subjects perform a decision task (Grether, 1980) in both a well-rested and experimentally sleep-deprived state. The experimental task allows us to explore the extent to which subjects weight prior odds versus new evidence (i.e., information) when forming subjective (posterior) beliefs of a particular event. Wellrested subjects display a tendency to overweight the evidence in forming subjective posterior probability estimates, which is inconsistent with Bayes rule but possibly consistent with use of a ‘representativeness’ heuristic. In his original Bayes rule experiment, Grether (1980) also found that typical student-subjects overweighted the evidence relative to the prior odds in making posterior assessments. Ironically, behavior following sleep-deprivation is more consistent with the use of Bayes rule, because this treatment significantly reduces the (over)weight that subjects place on the new evidence. Because choice accuracy is not significantly affected by sleep deprivation, the significant difference in estimated decision-model parameters may indicate that the brain compensates under adversity in certain risky choice decision environments.

    An Explorative Study on Heuristic Effects of Healthy Food Labels in an Online Shopping Situation

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    This study focuses on the representativeness heuristic effects of healthy food labels on consumer choice of healthy food. A within-subject experiment was arranged to identify whether consumers rely on representativeness heuristics when making a series of choices of food. Determining whether healthy food labels bias their choice under these limitations was of particular interest. Results (n=30) showed that some participants tend to develop a representativeness heuristic for choice in a series of food choices. For some consumers, healthy food labels do, to some extent, cue them into making biased choices. These results reveal that some consumers do find comparing healthiness of products tedious and rely on representativeness heuristics when making a choice. However, the use of healthy food labels specifically as a cue is very limited when other objective cues such as nutrition information are readily available.publishedVersio
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