Decision-Making Theories and Cognitive Biases

Confirmation bias is a cognitive bias that leads individuals to seek out information that supports their existing beliefs, while ignoring or downplaying information that contradicts them.

Hyperbolic discounting is a behavioral economics concept that describes the tendency for individuals to place a higher value on immediate rewards or benefits compared to future ones, even if the future rewards are objectively greater.

The bounded rationality model is a decision-making theory that assumes that individuals have limited cognitive resources and information, and therefore make decisions that are good enough rather than perfectly optimal.

The affect heuristic is a cognitive bias that leads individuals to make decisions based on their emotional reactions to a situation, rather than on a careful analysis of the facts.

Rational choice theory is a decision-making model that assumes that individuals are rational actors who seek to maximize their utility or benefit, given their constraints and preferences.

Heuristics are mental shortcuts or rules of thumb that individuals use to make decisions quickly and efficiently, often based on past experiences or learned associations.

Prospect theory is a decision-making model that incorporates the concept of loss aversion, where individuals place a higher weight on losses compared to gains, leading to risk-averse behavior in the domain of losses and risk-seeking behavior in the domain of gains.

The framing effect is a cognitive bias that describes how the way information is presented or framed can influence an individual's decision-making, even if the objective facts of the situation remain the same.

Game theory is a decision-making model that analyzes strategic interactions between multiple decision-makers, where each decision-maker's actions affect the outcomes of the others.

The availability heuristic is a cognitive bias that leads individuals to make decisions based on information that is easily accessible or comes to mind quickly, rather than on a comprehensive analysis of all relevant information.

Social decision-making theory emphasizes the role of emotions, social norms, and cultural values in shaping individual decisions, recognizing that decision-making is often influenced by social interactions and group dynamics.

Social proof is a cognitive bias that describes the tendency to make decisions based on the opinions or actions of others, rather than on one's own independent judgment.

The bounded rationality model incorporates the concept of bounded rationality and satisficing, where individuals seek a satisfactory solution rather than an optimal one, due to cognitive limitations and information constraints.

Narrow framing is a cognitive bias that describes the tendency to make decisions based on a limited set of information or experiences, rather than considering a broader range of alternatives.

Rational choice theory emphasizes the role of risk and uncertainty in shaping individual choices, and incorporates the concept of expected utility, where individuals weigh the potential benefits and risks of different options to make decisions.