| Normative decision making | how people should make judgments and decisions |
| Descriptive decision making | how people actually make judgments and decisions |
| Prescriptive decision making | practical suggestions on designing judgment and decision making processes based on normative and descriptive models |
| System 1 | fast intuitive system of decision making |
| System 2 | slow effortful system of decision making |
| Cognitive dissonance | mental discomfort when our actions don't match our beliefs |
| Heuristics | mental shortcuts to find adequate imperfect answers to difficult questions |
| Utility | whatever is maximized |
| Prospect theory | gains and losses are evaluated differently based on risk and uncertainty |
| Ambiguity aversion | willing to pay less for a vague choice than for a clear choice |
| Loss aversion | we rather avoid a loss over receiving the same size gain |
| Endowment effect | we attach a higher value to something that we own than what we don't own |
| Framing | the way information is presented influences judgments and decisions |
| Mental accounting | different accounts for different purposes. Gains and losses feel different depending on which account it is booked |
| Reality of decision making | only use a subset of available information in a biased way |
| Representativeness consists of | insensitivity to base rates: we tend to ignore priors insensitivity to sample size: fail to appreciate the importance of sample size" |
| Pattern recognition | focus on cause effect stories where chance and randomness are easily overlooked |
| Regression to the mean | numbers tend to their long term average |
| Motivated reasoning | unconsciously favor information that supports our pre existing beliefs rather than contradicting information to arrive at our desired outcome |
| Planning fallacy | underestimating the probability that at least somethings will go wrong overestimate the probability of conjunctive events underestimate the probability of disjunctive events |
| Decision crossover effect | future promotion decisions are based on current performance evaluations |
| Moral disengagement theory | people use common moral standards to control their actions and avoid breaking these rules |
| Elastic justification theory | how people stretch their reasoning to justify their decisions or actions to themselves and others |
| Risk aversion (different from risk averse) | we prefer a certain gain over a larger gain with more risk |
| Expectation gap | differences between the interpretation and the openness to other possible explanations |
| Increased pupillary response | Increased arousal which causes greater attention and cognitive processing |
| Over optimism | individuals believe they have greater control over uncertain events |
| Miscalibration | individuals underestimating the variance of uncertain outcomes and set distribution too narrow |
| Social comparison | compare own performance with someone else's |
