Individuals are faced with making decisions on a daily basis.

Individuals are faced with making decisions on a daily basis. Some of these decisions have various outcomes. Across individuals, there is variation in the quality of decision-making; such that, some individuals make better decisions than others. An important characteristic of decision-making, is that, in situations of uncertainty, individuals predict the likelihood of a particular outcome (Kahneman & Tversky, 1973).

Decision-making under uncertainty is affected by three factors. These are (1) prior knowledge, (2) information about the subject, object, and person, and (3) expected accuracy of prediction. Specifically, decision-making under uncertainty involves information about what we already know, information about the specific person, object, and how confident one is about their prediction. Altogether, these factors impact how one makes decisions on the daily.

Previous research has show that when individuals are making predictions about uncertain outcomes, there is a greater emphasis placed on previous knowledge (Johnson, 1987). That is, when an individual is uncertain about the outcome of a decision, they are more likely to rely on previous information and heuristics. For example, if an individual is uncertain about whether their team is going to win or lose in the upcoming game, the individual is more likely to rely on previous performances to make their predictions (Kahneman & Tversky, 1973).