CGSC201

042580

This course will offer a critical comparison of fully rational, normative principles of decision making and real-life decision processes in a majority of ordinary subjects. It will start with a presentation of the axioms and theorems of mathematical probability theory, followed by a presentation of the most common probabilistic fallacies (mostly derived from Prospect Theory -- Tversky and Kahneman being the main classic authors). We will see the framing of decisions, packing/unpacking of choices, anchoring, ease of representation, the conjunction fallacy, the disjunction fallacy, the neglect of base rates and the causal fallacy. The most characteristic examples will be offered to the class and responses will be collected anonymously via clickers (or similar). Lessons from the class responses will be derived. We will then move onto Subjective Expected Utility (SEU). The axioms will be presented and discussed. After this, the classic examples of violations of the axioms (The Allais Paradox, the Ellsberg Paradox and more) will be presented to the class and responses will be collected anonymously via clickers (or similar). Lessons from the class responses will be derived.

GRD - Regular Grades A, B, C, D, E

Undergraduate