Decision-Making, Risk and Opportunity Management

Recommended Prerequisites

Access general conditions to the master programme apply.

Teaching Methods

a) Lecture with class debate

b) Group Work

c) Literature Analysis and reviews

d) Knowledge application training (e.g. data analysis and discussion after an experiment simulation/performance).

Learning Outcomes

This course intends to provide core theoretical and research frameworks allowing for the understanding and discussion of main topics in decision-making. It is intended to reflect on applied aspects of decision-making and risk perception theoretical frameworks in both real time and context of social intervention. The focus is primarily on psychology contributions and methodology (either experimental or psychometric) pinpointing and discussing their inherent applied potential and limitations.

Work Placement(s)

No

Syllabus

Module I – The Rationality Debate – From Normative to prescriptive. Normative: Expected Utility (von Neumann & Morgenstern) and Subjective Expected Utility (L. Savage) – maximization of utility. Cues for an approach to decision-making quality. (9 hours)

Module II - The Rationality Debate – Descriptive Theories: Satisficing (H. Simon) and the role of environment. Security/Potencial and Aspiration Level Theory (L.Lopes). Intertemporal Choice and Hyperbolic Discounting (G. Loewenstein)., Prospect Theory, Framing Effects/Heuristics and Biases (Kahneman & Tversky). Fast and Frugal Heuristics (G. Gigerenzer) (15 hours)

Module III – Affect, Cognition and Decision-Making – impact of emotion in judgment, decision-making and risk perception. Affect Heuristic (Paul Slovic) – Heuristic as attribute substitution. Affective and Cognitive mechanisms of information in judgment construction: Somatic Marker (A. Damasio), Evaluability (C. Hsee), Psychophysical Numbing (18 hours)

Head Lecturer(s)

Armando Luís Diniz Mónica de Oliveira

Assessment Methods

Type C
Exam: 100.0%

Type A
Frequency: 100.0%

Type B
Individual or group work for knowledge integration and application: 100.0%

Bibliography

Baron, J. (1988). Thinking and Deciding. Cambridge. Mass.: Cambridge University Press.

Cooksey, R. W. (1996), Judgment Analysis: Theory, Methods, and Applications. San Diego, CA: Academic Press.

C. Henggeler Antunes & L. Cândido Dias (Eds.) Decisão: Perspectivas interdisciplinares (pp. 25-68). Coimbra: Imprensa da Universidade de Coimbra.

D. Kahneman & A. Tversky (Eds.) (2000). Choices, Values & Frames. Cambridge, MA: Cambridge University Press.

Gigerenzer, G.; Todd, P. & ABC Group (1999). Simple Heuristics that make us Smart. New York: Oxford University Press.

Hammond, K. (1996), Human Judgment and Social Policy: Irreducible Uncertainty, Inevitable Error, Unavoidable Injustice. New York: Oxford University Press.

Slovic, P. (1993). Perceived Risk, Trust, and Democracy. Risk Analysis, 13, 675-682.

Von Neumann, J. & Morgenstern, O. (1953). Theory of Games and Economic Behavior. Princeton: Princeton University Press, 3^rd ed.