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Introduction to Decision-Making & Error
This document introduces a class on behavioral economics and consumer decision-making. It discusses how people are subject to predictable errors in judgment and decision-making, even in areas we think we are good at like numbers, letters, colors, and shapes. It explains that if we make persistent mistakes in these simple domains, we are also likely subject to errors when making complex consumer and life decisions. The class will explore why these errors occur consistently and how to reduce them to make better choices.
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Introduction to Decision-Making & Error
- 1. Introduction to decision-making and errorBehavioral economics & consumer decision-makingDr. Russell James III, Texas Tech University
- 2. In this class,we will learn that our decision-making processes might not be as perfect as we think.And we will learn how to improve them.
- 3. Quick test ofspeed in answeringAnswer the next question as quickly as you can (while still being accurate). Don’t worry, it is a simple question and it won’t count against you if you get it wrong.Ready?
- 4. A bat andball together cost $1.10. The bat costs $1 more than the ball. How much does the ball cost?.05.10.55$1.00$1.10
- 5. A bat andball together cost $1.10. The bat costs $1 more than the ball. How much does the ball cost?.05.10.55$1.00$1.10Most Common Answer (Wrong)If the bat costs $1 more than .10 it costs $1.10, So, the bat and ball TOGETHER would cost $1.20.
- 6. Try a letterstestHow many times does the letter “F” appears in the following sentence?FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF YEARS
- 7. Your ability toidentify lettersHow many times does the letter “F” appears in the following sentence?FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF YEARS
- 8. A test ofyour decision-making skillsLet’s go with something simpler than numbers or letters.Identifying colors and shapes.
- 9. Identifying colors.You willsee a mixture of words, non-words, and shapes. Say the COLOR (red, blue, yellow, or green) of each form you see, as quickly as possible.
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- 33. How many ofyou were able to name each color without any mistakes?
- 34. So, instead ofnumbers, letters, or colors, let’s try shapes.
- 35. Which table hasthe longest tabletop?Table on the leftTable on the rightNeither (both are of equal length)
- 36. Which table hasthe widest tabletop?Table on the leftTable on the rightNeither (both are of equal width)
- 37. Which table hasthe longest tabletop?
- 38. Which table hasthe longest tabletop?
- 39. Which table hasthe longest tabletop?
- 40. Which table hasthe longest tabletop?
- 41. Which table hasthe longest tabletop?
- 42. Which table hasthe longest tabletop?
- 43. Which table hasthe widest tabletop?
- 44. Now that youknow, does the illusion go away?
- 45. Now that youknow, does the illusion go away?
- 46. Now that youknow, does the illusion go away?
- 47. Now that youknow, does the illusion go away?
- 48. Now that youknow, does the illusion go away?
- 49. Do we experience“decision illusions” in the same way we experience “optical illusions”?
- 50. If we makepersistent errors in things we are very good at like numbers, letters, colors, and shapes… how likely is it that we are also subject to persistent, predictable errors in areas of consumer decision-making?
- 51. What is aheadWewill learn why some judgment errors occur consistently.
- 52. We will learnhow these errors can cause disastrous, life-altering mistakes.And we will learn strategies to reduce these problems and make better decisions.
- 53. Slides by: RussellJames III, J.D., Ph.D., CFP®Associate Professor Division of Personal Financial Planning Texas Tech [email protected] use these slides! If you think you might use anything here in a classroom, please CLICK HEREto let me know. Thanks!The outline for this behavioral economics series is at http://www.slideshare.net/rnja8c/outline-for-behavioral-economics-course-component
Editor's Notes
- #5 A: .05 (.05 + 1.05 = $1.10)
- #6 A: .05 (.05 + 1.05 = $1.10)
- #7 Most people will say 3 as the F in OF is typically ignored.; Without clickers do a hand raise with “how many counted 1?” 2? 3? OK. Did anyone count 6?
- #8 Most people will say 3 as the F in OF is typically ignored.; Without clickers do a hand raise with “how many counted 1?” 2? 3? OK. Did anyone count 6?
- #49 You can click these line(boxes) and rotate during class to show that you aren’t faking it.