Heuristics Case

Abstract

Heuristics are shortcuts we use to make decisions or solve complex problems when we do not have all information available at our disposal. No analysis of the problem or situation is made prior to a decision; it is “the rule of thumb” or “the shortcut rule.” Heuristic is a learned process which has existed since the beginning of time. We use heuristics every day in mundane situations without realizing it; this includes work situations and our personal lives. The following essay discusses some well-known heuristics and biases with examples.

The Familiarity Heuristic

We are all creatures of habits in some respects and we love familiar things as we are comfortable with it. For example, most of us buy brand names we love because they have a good reputation and they worked out well for us in the past. When we go to the supermarket, we are more likely to buy brand foods we love because they taste good, as opposed to buying generic brand foods which may or may not taste good. If we have somewhere to drive to, we take the route that is most familiar to us that we have used time and time again, as opposed to a route we only took once and is not too familiar with. The downfall to the familiarity heuristic is we do not have the incentive to try new things, even though we know it could be good for us. What if on that unfamiliar route we end up meeting some amazing people we have always wanted to meet? Or what if something else happens on that particular day that may have an impact on our lives? We may never know because we want to stick with a familiar route.

The Availability and Representativeness Heuristic

The availability heuristic states that the more vivid a memory is, the more we are likely to say it occurred, regardless of the actual data. The memory could be painful or pleasurable, it could have occurred recently or it could be associated with emotions. The recent plane crash in Nigeria would make some people nervous about flying on airplanes because this is the most recent available memory about flying internationally. The accessibility of this information has now increased. Vivid situations make themselves more available, while uncomfortable situations can make some people go into denial that the uncomfortable situations ever happened.

The representativeness heuristic says we assume two objects have commonality because they have similar appearance. For example, if a company is currently doing well, investors will judge the company’s past performance and will assume that this past performance is indicative of future performance. If a sports star has an amazing past record, we assume he/she will do well in future games. This is a big problem because we underestimate failure or change. We tend to think this momentum will continue and this is not usually the case. The familiarity heuristic