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Consistent Preferences: The rational choice model assumes that preferences will remain consistent, in order to maximize personal utility based on available information; Best course of action: The simple rational choice model assumes that individuals are capable of calculating the best course of action and that they always intend to do so.
The ambiguity effect is a cognitive tendency where decision making is affected by a lack of information, or "ambiguity". [1] The effect implies that people tend to select options for which the probability of a favorable outcome is known, over an option for which the probability of a favorable outcome is unknown.
There have been various attempts to provide decision-theoretic explanations of Ellsberg's observation. Since the probabilistic information available to the decision-maker is incomplete, these attempts sometimes focus on quantifying the non-probabilistic ambiguity that the decision-maker faces – see Knightian uncertainty.
The distinction between ambiguity aversion and risk aversion is important but subtle. Risk aversion comes from a situation where a probability can be assigned to each possible outcome of a situation and it is defined by the preference between a risky alternative and its expected value. Ambiguity aversion applies to a situation when the ...
The fact that one more easily recall information one has read by rewriting it instead of rereading it. [183] Frequent testing of material that has been committed to memory improves memory recall. Tip of the tongue phenomenon When a subject is able to recall parts of an item, or related information, but is frustratingly unable to recall the ...
A famous loss-aversion experiment is to offer a subject two options: They can either either receive something like $30 in guaranteed money — or a coin flip where they can receive either $100 or ...
Aversion means opposition or repugnance. The following are different forms of aversion: Ambiguity aversion; Brand aversion; Dissent aversion in the United States of America; Endowment effect, also known as divestiture aversion; Food aversion; Inequity aversion; Loss aversion; Risk aversion; Taste aversion; Work aversion; Aversion may also refer ...
"The important thing to keep in mind is whether that food aversion is impacting your quality of life," she says. "If it's just a few preferences but someone eats other foods in that food group, it ...