Q.1 Which of the following best defines 'decision making' in cognitive psychology?
The process of forming memories for future use
The process of evaluating and choosing among alternatives
The automatic response to external stimuli
The process of learning through reinforcement
Explanation - Decision making involves assessing different options and selecting the one that best aligns with goals or preferences.
Correct answer is: The process of evaluating and choosing among alternatives
Q.2 What is 'bounded rationality' in decision making?
Decision making without considering any constraints
Decision making limited by cognitive resources and information availability
Making random choices
Decision making driven solely by emotion
Explanation - Bounded rationality recognizes that human decisions are constrained by limited knowledge, time, and cognitive capacity.
Correct answer is: Decision making limited by cognitive resources and information availability
Q.3 Which heuristic involves estimating the likelihood of an event based on how easily examples come to mind?
Representativeness heuristic
Availability heuristic
Anchoring heuristic
Confirmation heuristic
Explanation - The availability heuristic leads people to judge probability based on the ease with which examples can be recalled.
Correct answer is: Availability heuristic
Q.4 The tendency to stick with a previous decision even when it is clearly wrong is called:
Sunk cost fallacy
Confirmation bias
Hindsight bias
Overconfidence effect
Explanation - People continue investing in a decision due to prior investment of time, money, or effort, rather than rational evaluation.
Correct answer is: Sunk cost fallacy
Q.5 Which type of decision making relies on quick, automatic, and intuitive judgments?
System 1 thinking
System 2 thinking
Analytical reasoning
Algorithmic problem solving
Explanation - System 1 is fast, intuitive, and often subconscious, while System 2 is slower and analytical.
Correct answer is: System 1 thinking
Q.6 In decision making, 'framing effect' refers to:
The influence of prior knowledge on choices
The influence of how information is presented on decisions
Decisions based solely on numerical data
Decisions that are delayed due to overanalysis
Explanation - The framing effect shows that choices can be affected by whether options are presented as gains or losses.
Correct answer is: The influence of how information is presented on decisions
Q.7 Which bias involves favoring information that confirms one’s pre-existing beliefs?
Confirmation bias
Anchoring bias
Availability bias
Self-serving bias
Explanation - People often selectively attend to information that aligns with their beliefs and ignore contradictory evidence.
Correct answer is: Confirmation bias
Q.8 The 'representativeness heuristic' can lead to errors because:
It relies on vivid examples
It ignores base rates and probability
It requires excessive computation
It always produces accurate judgments
Explanation - People may judge probability based on similarity to a prototype rather than actual statistical likelihood.
Correct answer is: It ignores base rates and probability
Q.9 Which concept describes overestimating one’s ability to predict outcomes after they have happened?
Hindsight bias
Overconfidence effect
Gambler’s fallacy
Anchoring effect
Explanation - Hindsight bias occurs when people believe that events were more predictable after they occur than they actually were.
Correct answer is: Hindsight bias
Q.10 A decision strategy that guarantees a correct solution by following a step-by-step procedure is called:
Algorithm
Heuristic
Trial and error
Intuition
Explanation - Algorithms are systematic, logical rules or procedures that, if followed correctly, guarantee a solution.
Correct answer is: Algorithm
Q.11 The tendency to rely too heavily on the first piece of information encountered is called:
Anchoring effect
Confirmation bias
Availability heuristic
Framing effect
Explanation - Anchoring occurs when initial information serves as a reference point and affects subsequent judgments.
Correct answer is: Anchoring effect
Q.12 Which decision-making style is most likely to be slow, deliberate, and analytical?
System 2 thinking
System 1 thinking
Intuitive judgment
Heuristic processing
Explanation - System 2 thinking is effortful, logical, and conscious, used for complex and novel problems.
Correct answer is: System 2 thinking
Q.13 Which phenomenon occurs when people continue to invest in a losing course of action due to prior investments?
Sunk cost effect
Optimism bias
Loss aversion
Status quo bias
Explanation - Individuals may irrationally persist with a choice because of resources already spent rather than expected outcomes.
Correct answer is: Sunk cost effect
Q.14 Which type of bias involves preferring current circumstances over change?
Status quo bias
Confirmation bias
Availability heuristic
Overconfidence effect
Explanation - Status quo bias reflects a tendency to favor existing conditions and resist change.
Correct answer is: Status quo bias
Q.15 When decisions are influenced by emotional reactions rather than rational analysis, it is called:
Affective heuristic
Representativeness heuristic
Availability heuristic
Anchoring
Explanation - The affective heuristic describes how emotions can bias risk perception and decision outcomes.
Correct answer is: Affective heuristic
Q.16 Which fallacy involves believing that a sequence of independent events affects future outcomes?
Gambler’s fallacy
Confirmation bias
Sunk cost fallacy
Anchoring bias
Explanation - People often mistakenly think that random events will ‘even out’ in the short term, such as coin tosses.
Correct answer is: Gambler’s fallacy
Q.17 The tendency to overestimate knowledge or control over events is called:
Overconfidence effect
Hindsight bias
Availability bias
Framing effect
Explanation - Overconfidence can lead to poor decisions as individuals overrate their ability to predict outcomes.
Correct answer is: Overconfidence effect
Q.18 A simple rule or shortcut used to make decisions quickly is called:
Heuristic
Algorithm
System 2 thinking
Intuitive judgment
Explanation - Heuristics reduce cognitive effort but can sometimes result in biased or suboptimal decisions.
Correct answer is: Heuristic
Q.19 The tendency to focus on potential losses more than equivalent gains is known as:
Loss aversion
Optimism bias
Anchoring
Availability heuristic
Explanation - Loss aversion is a key principle in prospect theory, where losses have a stronger psychological impact than gains.
Correct answer is: Loss aversion
Q.20 Which term describes decision making under uncertainty by evaluating the most likely outcomes?
Probabilistic reasoning
Heuristic processing
Algorithmic approach
Intuitive judgment
Explanation - Probabilistic reasoning involves estimating the likelihood of outcomes to guide decisions under uncertainty.
Correct answer is: Probabilistic reasoning
Q.21 Which bias occurs when people remember successes more than failures in decision outcomes?
Selective memory bias
Confirmation bias
Anchoring bias
Availability heuristic
Explanation - Selective memory can distort decision making by overemphasizing positive outcomes and underemphasizing negative ones.
Correct answer is: Selective memory bias
Q.22 A decision-making approach that combines multiple criteria to evaluate options is called:
Multi-criteria decision analysis (MCDA)
Heuristic processing
System 1 thinking
Satisficing
Explanation - MCDA systematically weighs different factors to make informed, balanced decisions.
Correct answer is: Multi-criteria decision analysis (MCDA)
Q.23 When people prefer options that are easy to justify rather than those that are optimal, it is called:
Satisficing
Maximizing
Heuristic decision making
Anchoring
Explanation - Satisficing involves choosing a good enough option rather than the best possible one, often to reduce cognitive effort.
Correct answer is: Satisficing
Q.24 Which factor often leads to risk-averse decisions in uncertain situations?
Loss aversion
Confirmation bias
Overconfidence
Anchoring
Explanation - People weigh potential losses more heavily than equivalent gains, making them more cautious under uncertainty.
Correct answer is: Loss aversion
Q.25 Which type of decision-making error occurs when individuals underestimate uncertainty or variability?
Overprecision
Gambler’s fallacy
Sunk cost effect
Framing effect
Explanation - Overprecision is a form of overconfidence where people overestimate the accuracy of their knowledge or predictions.
Correct answer is: Overprecision