Heuristics and Biases in Decision Making: Tversky and Kahneman's Study

This assignment examines the decision-making processes as described by Tversky and Kahneman (1974), focusing on the role of heuristics and biases. The assignment explains how heuristics, such as representativeness, anchoring, and availability, influence judgments under uncertainty and can lead to systematic errors. It discusses how cognitive illusions, like the illusion of validity, impact decision-making. Furthermore, it highlights the importance of understanding these biases to improve the accuracy of predictions and decisions. The assignment also touches upon the adjustment process from initial estimations, and how these adjustments can be affected by biases. The assignment uses the research to outline the impact of these cognitive shortcuts on the accuracy and effectiveness of decisions.

How did Tversky and
Kahneman s 1974 paper
describe the process of
decision making

TABLE OF CONTENT
Decision making process ................................................................................................................1
REFERENCES ...............................................................................................................................2

Decision making process
As per Tversky & Kahneman, (1974), judgments formulated on the basis of mental
operations or heuristics influences the consequences as well as effectiveness of decision making
process. Though heuristics provides an economic, quick and effective way to make decisions but
they can also lead to predictable and systematic errors. In the situations of uncertainty people use
heuristics for making judgements which can also leads to bias. The heuristics used for decision
making process may be in the form of representativeness, anchoring and adjustments and
availability. The cognitive illusions also act as perceptual illusions which further leads to
cognitive biases. Thus in order to make decisions probability or logical concepts are embedded
with the judgmental description of the problem as well as with the intuitive judgement of the
people.
The individuals can judge the probability of an event on various criteria such as on the
basis of its resembles or similarity with other event or on the basis of ease with which it is
recalled or remembered by people. However it can generate bias in decisions in the form of
misconceptions, illusion of validity, insensitivity, illusory correlation and restricted imagination.
Further on the basis of these judgements people calculate estimations and then adjust to some
extent for making their decisions. The adjustment from the initial point is accomplished mainly
when making numerical predictions and a specific or relevant value is given. The use of
heuristics in these stages assist in making decisions but is also enhances the probability of bias
and inaccuracy in decisions.
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REFERENCES
Books and Journals
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and
biases. Science. 185(4157). 1124-1131.
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