Introduction to Cognitive Psychology - Department of Psychological ...

Greg Francis 1/7/11Notice!! Subjects hardly ever select the Comet or theClarion!!you might think they do not enter the decisionmaking process at all!!!but they do!! The comparison of Asteroid and Comet clearlyfavors the Asteroid!!it is less clear for the Bravo and Comet!!it is the reverse for ClarionPurdue UniversityConsumer beware!! Stores are very aware of this type ofbehavior!! Thus, they often stock merchandise for thesole purpose of influencing your purchasingbehavior!!usually towards a more expensive model!! Likewise companies make low-end modelssimply to bias you toward higher endmodels and against the competitionPurdue UniversityLoss aversion!! Another general property of decision making is thatpeople tend to be more sensitive to losses than togains!! thus people rarely take an “even-bet”!! the loss of $10 is more significant than the gain of $10!! This is also why fans of sports teams think thereferees treat their team unfairly!! In a game of basketball, each team will!! have fouls called on them when they shouldn’t have (a loss)!! Commit fouls that are not called (a gain)!! But the gains don’t count as much as the losses!! So in a truly fair game both teams (and their fans) feel as ifthey were treated unfairly!! of course one team wins, so it feels that it overcame theinjusticePurdue UniversityLoss aversion!! The same phenomenon ruins many marriages/relationships!! When your partner does something for you (a gain) itdoesn’t count as much as when your partner doessomething against you (a loss)!! Thus, you perceive your relationship as overall not beingworth the trouble (even if your partner is good as often asbad)!! That’s why therapists suggest that in successfulrelationships people must learn to forgivePurdue UniversityLoss aversion!! By definition a choice is a loss or a gaindepending on where you start!! As a result, loss aversion dramatically affectsmany types of choices by magnifying thosecharacteristics of a choice that leads to aperceived loss!! Consider choosing a jobPurdue UniversityChoosing a job: 1!! You have decided to leave your current job. It islocated so far away from your apartment that itrequires an 80-minute commute each way. But you dolike the fact that your job involves much pleasantsocial interaction with your coworkers. Your search fora new job has given you two options and now youmust choose between them. Which job would youprefer?!! Job A: Limited contact with others, commuting time 20minutes.!! Job B: Moderately sociable, commuting time 60 67%minutes.Purdue UniversityPSY200 Cognitive Psychology 4