Understanding dopamine’s role in decision making is critical. Humans make decisions, which are far more complicated than other animals, and dopamine is thought to be a key contributor to the relative importance of “gut feeling” over rational thought. Dopamine signals the expected pleasure from future possible events and this signal then informs our choices. Building …
When the outcomes of a decision are uncertain, emotions play a role in guiding it. Emotions are the tools we use to simplify the world into heuristics, or general rules of thumb, as they allow our brains to take shortcuts and approximate rational thinking. Fear and anxiety detect risky choices, this is why we need …
The interaction cost is the sum of efforts — mental and physical — that the users must deploy in interacting with a site in order to reach their goals. Zero interaction cost and is the holy grail of usability as a field. Most of the time, users have to look around, read, possibly scroll, find …
Mental accounting refers to the tendency for people to separate their money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. According to the theory, individuals assign different functions to each asset group, which has an often irrational and detrimental effect on their …
Naive diversification is best described as a rough and, more or less, instinctive common sense division of a portfolio, without bothering with sophisticated mathematical models.
The peak–end rule is a psychological heuristic in which people judge experiences largely based on how they were at their peak (i.e., their most intense point) and at their end, rather than based on the total sum or average of every moment of the experience.
A theory that people value gains and losses differently and, as such, will base decisions on perceived gains rather than perceived losses. Thus, if a person were given two equal choices, one expressed in terms of possible gains and the other in possible losses, people would choose the former. Also known as loss aversion.