a, How is your rationality bounded with respect to your decisions in general, for example buying a new car? In what ways are you optimizing? In what ways are you satisficing? Explain. b. Which cognitive biases and behavioral challenges could affect your decision-making? How could noise, as described in this class, affect your decision-making? Explain. c. Suggest a heuristic that should be helpful when making this decision. Explain why it should usually help (which bias is it related to) and when it might lead to mistakes. d. How can you nudge yourself to a better decision? Why do you expect it to work? What other techniques can you use to limit the effects of biases and noise? e. How might the cognitive effects of scarcity (e.g. focus dividend, bandwidth tax) or present bias affect the financial aspect of your decision? How will you reduce this effect?
a, How is your rationality bounded with respect to your decisions in general, for example buying a new car? In what ways are you optimizing? In what ways are you satisficing? Explain.
b. Which cognitive biases and behavioral challenges could affect your decision-making? How could noise, as described in this class, affect your decision-making? Explain.
c. Suggest a heuristic that should be helpful when making this decision. Explain why it should usually help (which bias is it related to) and when it might lead to mistakes.
d. How can you nudge yourself to a better decision? Why do you expect it to work? What other techniques can you use to limit the effects of biases and noise?
e. How might the cognitive effects of scarcity (e.g. focus dividend, bandwidth tax) or present bias affect the financial aspect of your decision? How will you reduce this effect?
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