Book contents
- Making Decisions: Analytics, Cognition, and Application
- Making Decisions: Analytics, Cognition, and Application
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Acknowledgments
- Copyright Acknowledgements
- Part I Analytics: Probability, Evaluation, Decision Trees, and Strategies for Decision Making
- Introduction to Part II: Cognitive Processes of Decision Making
- 5 Heuristics: Assumptions and Quick Rules of Thumb We All Use, But Maybe Shouldn’t
- 6 Prospect Theory: Psychological Aspects beyond Expected Value
- 7 Two Systems: A Descriptive Model That Explains How People Make Decisions
- 8 Decisions Are Made Based on Our Memories, But How Reliable Are Our Memories?
- 9 Psychology + Economics = Behavioral Economics = Ways to (Gently) Influence Decisions
- Part III Applications, Examples, and Selected Topics
- References
- Index
- References
5 - Heuristics: Assumptions and Quick Rules of Thumb We All Use, But Maybe Shouldn’t
from Introduction to Part II: Cognitive Processes of Decision Making
Published online by Cambridge University Press: 23 October 2025
Book contents
- Making Decisions: Analytics, Cognition, and Application
- Making Decisions: Analytics, Cognition, and Application
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Acknowledgments
- Copyright Acknowledgements
- Part I Analytics: Probability, Evaluation, Decision Trees, and Strategies for Decision Making
- Introduction to Part II: Cognitive Processes of Decision Making
- 5 Heuristics: Assumptions and Quick Rules of Thumb We All Use, But Maybe Shouldn’t
- 6 Prospect Theory: Psychological Aspects beyond Expected Value
- 7 Two Systems: A Descriptive Model That Explains How People Make Decisions
- 8 Decisions Are Made Based on Our Memories, But How Reliable Are Our Memories?
- 9 Psychology + Economics = Behavioral Economics = Ways to (Gently) Influence Decisions
- Part III Applications, Examples, and Selected Topics
- References
- Index
- References
Summary
Heuristics are quick rules-of-thumb and easy-to-use tools that people often use to make decisions. Heuristics have been identified by research psychologists to describe and explain behavior.
With the representative heuristic, people will estimate the likelihood or probability of an event based on how similar it is to other known situations. With the heuristic of ignoring base rates, people will ignore hard data and will instead estimate probabilities based on narratives, even if the narratives are lacking in relevant details. With the availability heuristic, people estimate likelihood based on how quickly and easily something comes to mind. With anchoring and adjustment, people will first anchor an initial estimate based on the first number indicated, and they will adjust their estimate up or down from there. With satisficing, people will look for an acceptable solution that meets minimum requirements, but will not invest additinoal resources in seeking a perfect or optimum solution. Regression toward the mean explains why initial outliers move closer to the average with subsequent repetition.
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- Making Decisions: Analytics, Cognition, and Application , pp. 63 - 73Publisher: Cambridge University PressPrint publication year: 2025
References
Recommended Reading
Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological Review, 63(2), 129–138. https://doi.org/10.1037/h0042769CrossRefGoogle ScholarPubMed
Schwartz, B., Ward, A., Monterosso, J., Lyubomirsky, S., White, K., & Lehman, D. R. (2002). Maximizing versus satisficing: Happiness is a matter of choice. Journal of Personality and Social Psychology, 83(5), 1178–1197. https://doi.org/10.1037//0022-3514.83.5.1178.CrossRefGoogle ScholarPubMed
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124.CrossRefGoogle ScholarPubMed
Tversky, A., & Kahneman, D. (1982). Judgment under uncertainty: Heuristics and biases. Judgment under Uncertainty, 3–20. https://doi.org/10.1017/cbo9780511809477.002.CrossRefGoogle Scholar
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