The Complexities of Decision Making
Unit 1 · Lesson 1.6 · Last updated May 20, 2026
A 45-minute lesson introducing three cognitive biases — present bias, sunk cost fallacy, and framing effect — through real-world scenarios and collaborative chat stations.
Overview
In this lesson, students deepen their ability to apply the principles of economic thinking as they are introduced to three major cognitive biases: present bias, sunk cost fallacy, and framing effect. Students work with peers to analyze real-world examples of decision making complicated by these biases and identify examples in their own lives. Examples from the summarizer scenarios in Lesson 1.5 are expanded upon in this lesson.
Learning Objectives
- Identify and explain examples of cognitive biases in real-world scenarios.
- Explain how cognitive biases influence decision making.
Create a free account, or log in.
Get full access to materials, the complete lesson sequence, aligned standards, and every lesson across all units.
Already a member? Sign in here.
Materials
- Instruction Slides (display during class period)
- 1.5 Student Handout (previously distributed)
- Student Handout pp. 5–6 (1 copy per student)
- Optional: Key Terms p. 7 (1 copy per student)
- KEY Economist as Life Coach p. 8 (1 copy for educator use)
- Chat Station p. 9 (class set — 1 copy per 12 students + 1 extra, cut apart)
Lesson Sequence
Slides 2–3
- Display Slide 2. Direct students to follow the instructions on the slide and discuss with a peer. Note: This activator assumes students completed and have access to the summarizer from Lesson 1.5. Additional educator tips and suggested answers are in the notes section throughout Instruction Slides.
- After approximately 2 minutes, stop discussions and tell students that many decisions humans make are much more complicated than previously allowed for in the course. Students should keep their 1.5 Student Handout accessible as it will be referenced later in the lesson.
- Proceed to Slide 3 and introduce the learning objectives. Note: Lessons 1.1–1.5 used "tidy" assumptions to provide a foundation for applying economic thinking in simplified scenarios. This lesson introduces "messy" circumstances to challenge and deepen understanding — a structure that continues throughout Unit 2.
Slides 4–24
- Display Slide 4. Distribute 1 copy of Student Handout to each student. Explain that economists often make assumptions about human behavior to extrapolate larger trends, but human behavior does not always consistently align with these assumptions. Note (Key Terms): Key Terms can be used as scaffolding during the lesson or for metacognition after Step 19. As scaffolding, distribute before the lesson. As metacognition, distribute after Step 19 and encourage students to review definitions and add missing details to Student Handout.
- Progress through Slides 5–9 to explain the assumptions made in Unit 1 up to this point. Remind students to add notes and drawings to Student Handout throughout the lesson.
- Display Slide 10. Direct students to consider the question on the slide. Call on volunteers to share responses.
- Advance to Slide 11. Click to reveal the text and explain why it is not inherently problematic that humans don't always fulfill economic assumptions.
- Proceed to Slide 12. Tell students that for the remainder of the lesson they will explore the "messy" side of human decision making and how cognitive biases influence choices.
- Display Slide 13. Tell students to consider the question as they read the 2 headlines. Click to reveal them one at a time. Allow 30 seconds for peer discussion.
- Proceed to Slide 14. Define the framing effect and explain its impact on decision making. Click to reveal the question and direct students to discuss with a peer for 10 seconds. Debrief as a class.
- Advance to Slide 15. Ask students to consider the questions and allow 10 seconds to think.
- Progress to Slide 16. Use the headline to explain that if students answered yes to the previous questions, they are like the majority of Americans who quit New Year's Resolutions — likely influenced by present bias.
- Display Slide 17 to define present bias. On Slide 18, click to reveal and explain the effects of present bias on decision making.
- Proceed to Slide 19. Instruct students to think about the questions. After 10 seconds, tell students that if they answered yes to the first question, they were likely influenced by the sunk cost fallacy.
- Display Slide 20. Define the sunk cost fallacy and explain its impact on decision making.
- Proceed to Slide 21. Direct students to discuss the question with a peer for 30 seconds. Display Slide 22 to define cognitive bias and ask students to assess how complete their definition was.
- Display Slide 23. Click to explain how students can avoid these cognitive biases. Encourage students to add notes to Student Handout.
- Proceed to Slide 24. Tell students to pull out their 1.5 Student Handout and follow the instructions on the slide, working with a peer. Allow 3–5 minutes. Circulate and reference KEY Economist as Life Coach as needed. Pro Tip: The remaining scenarios on the handout are ready-made retrieval practice. If assigned later in the unit as out-of-class practice, students will need access to KEY Economist as Life Coach — posting it to a learning management system is a low-cost way to provide immediate feedback.
Slides 25–26
- Progress through Slides 25–26. Tell students to read the instructions on Slide 26.
- Distribute Chat Station prompts separately around the room at groups of desks or hung on walls/boards to create multiple stations for each prompt. Note: Keep an additional set of Chat Station prompts handy.
- Place students into groups of 3 (4 if needed). Tell students they will have 3 minutes at each station. Direct students to turn to the "Chat Station Thoughts" section of Student Handout — their focus should be on conversation, not crafting written responses. Note: If time is tight, consider rotating Chat Station prompts between groups instead of rotating students.
- Tell groups to move to any available Chat Station and discuss the prompt. After approximately 3 minutes, tell students to move to a different numbered station. Note: Groups can visit stations in any order but must visit all four. If a group returns to a prompt already visited, provide them with an extra copy of an unvisited prompt.
Slides 27–31
- Progress through Slides 27–31 to facilitate a class conversation about each station and highlight how students can avoid succumbing to cognitive biases in their own decision making. Students may add additional notes to Student Handout. Pro Tip: Consider starting the debrief with the prompt groups found most challenging.
Aligned Standards
Voluntary National Content Standards in Economics
Standard 2 Decision-Making
What Educators Are Saying
It was fun!
High School Economics Student, Arkansas
I liked the lesson. Very engaging and not boring. I liked how interactive the handout was with a fun doodle.
High School Economics Student, Arizona
The cognitive biases helped my students tease out how they bring their individual experiences to every decision they make.
High School Economics Teacher, New Hampshire