Chapter 8 Econ Behav

Consider a nuclear reactor. There are 3 unique layers of safety precautions that can protect the public from a meltdown, which we will call Layer A, Layer B, and Layer C.
In any given week, each layer of safety precautions has a probability of failure = 0.001 (all numbers made up!). For a meltdown to occur, every layer of safety precautions must fail simultaneously.

believing outcomesare dependent when they are not.

This heuristicassigns probability based on how similar an
outcome is to what one would expect

We expect rolling six dice to produce a jumble of
numbers, so Sequence A is more like the outcome
we expect (more representative).

is the (erroneous) belief that small sampleswill accurately represent larger samples or the population.

tendency to overestimate conjunctions (joint probabilities)

ex: I overestimate my chances of getting an A on an exam.

tendency to underestimate disjunctions (OR probabilities)

ex: I underestimate the risk of bad things happening
to me

beliefs regarding the likelihood of various outcomes can change as we receive new information/evidence.

tendency to focus on the effectiveness of the test, or the predictive power of the evidence, and give insufficient consideration to the base rate.

ex: Screenings for very rare diseases

endency for people to interpret evidence in a way that further enforces their current beliefs.

A tendency to like or dislike everything about a person, including unobserved attributes

ex: Our first impressions carry outsize weight in our evaluation of people

we judge something to be more common based on how quickly specific or general examples come to mind

ex:We may believe that deaths from fighting in Syria outnumbered deaths from car accidents this summer, since Syria was in the news