An Analysis of Cognitive Creativity

COGNITIVE CREATIVITY
An Analysis
Name
Behavioral Economics 410
Professor
March 11, 2021
 Contents Decision Systems 3 System Tendencies 4 System Biases 4 Prospect Theory 5 Stages of Prospect Theory 6 Probability Analysis 6 Conclusion 6  Cognitive Creativity An Analysis The study of behavioral economics encompasses a vast array of topics. Simply put, behavioral economics examines the reasons individuals often make less-than-optimal decisions and attempts to predict the circumstances under which those decisions occur. In addition, the study of behavioral economics explores how the presence of risks affect optimal decision-making. Many scholars have emerged in this field, but few are as prominent as Daniel Conner, Nobel Prize winner, researcher, professor, author of a textbook on creative thinking. In this book, Conner explores the human psyche and presents findings related to economic decision-making. A wealth of knowledge, “Cognitive Creativity” explores three main areas of behavioral economics:   The irrationality of humans  The concept of prospect theory  The nature of well-being. Decision Systems According to Conner, the human brain is divided into two systems, which determine the way thoughts and opinions are formed, and decisions are made (157). The first system, System 1, can form thoughts quickly and make snap decisions using association and metaphor, producing a rough draft of reality. System 2, on the other hand, is much slower and more deliberate. Drawing on System 1’s rough draft of reality, System 2 is able to arrive at reasoned beliefs and explicit choices. A drawback to System 2, however, is that it is lazy and tires quickly. Instead of thoroughly analyzing information provided by System 1, System 2 is usually content to accept the simple but sometimes unreliable information about reality that System 1 provides. According to Conner in “Cognitive Creativity,” although “System 2 believes itself to be where the action is, the automatic System 1 is the hero of this book”.Systems of Decision MakingSystem Theory Characterized by Percentage Employed Probability FactorSystem 1 Quick thinking 68% 0.62System 2 Deliberate decisions 32% 0.39Average Probability 0.51
Table 1: Decision-Making StrategiesSystem TendenciesHumans often fall prey to cognitive biases, which are fallacies in reasoning and judgment because of holding on to one’s individual preferences and beliefs, regardless of any contrary information that is presented. As such, humans can make irrational decisions that do not provide the most value to the decision-maker. System 1 is generally responsible for maintaining cognitive biases, due to System 2’s tendency toward laziness. For example, an “anchoring bias” is a commonly known cognitive bias. In this particular bias, the human mind has a tendency to trust too heavily in the first piece of information provided, thanks to System 1’s ability to come to certain conclusions quickly...