HEURISTICS

• heuristics—simple rules for making complex decisions or drawing inferences in a rapid and efficient manner.

• Amos Tversky and Daniel Kahneman have carried out series of

experiments to demonstrate that human beings use mental short-cuts
to make sense of the world under conditions of uncertainty. They
proved that individuals do not think rationally while making judgments.
They make systematic errors and biases in their inferences. They argued
that human beings use heuristics because they cannot manage
information. This is known as information overload. Human cognitive
system can process limited amount of information at a given point of
time. When the information is more than it could be processed, we fail
to process all information. This is called as information overload.
• We use smart tactics under conditions of information overload and
manage this information. These tactics are known as heuristics.
Heuristics are simple rules of thumb or mental shortcuts that help us to
make complex decisions and drawing inferences in speedy and efficient
way. They reduces our mental efforts. Tversky and Kahneman have
demonstrated the use of three heuristics.
• They are :
• 1. Representativeness Heuristics,
• 2. Availability Heuristics, and
• 3. Anchoring and Adjustment Heuristics.
• Heuristics are rules of thumb or mental shortcuts that people use to
make decisions and draw inferences rapidly and with reduced efforts
when the cognitive system is overloaded with information.
• In representativeness heuristic, a judgement is made about a person,
event or object based on how similar or representative it is thought to
be of a category or prototype.
• Suppose that you have just met your next-door neighbor for the first time. While chatting with her, you notice that
she is dressed conservatively, is neat in her personal habits, has a very large library in her home, and seems to be
very gentle and a little shy. Later you realize that she never mentioned what she does for a living. Is she a business
manager, a physician, a waitress, an artist, a dancer, or a librarian? One quick way of making a guess is to compare
her with a prototype—a list of attributes commonly possessed by members of each of these occupations.

• If you made your judgment about your neighbor’s

• occupation in this manner, you used the representativeness heuristic. In
other words,
• you made your judgment on the basis of a relatively simple rule: The
more an individual seems to resemble or match a given group, the more
likely she or he is to belong
• to that group.
• Why did we make this error? It happened because we used
something called as ‘representativeness heuristics’. When likelihood
of an event is judged on the basis of the extent that it represents the
essential features of the parent population or of its generating
process is called as representativeness heuristics. When an individual
is similar to a typical member of a given group, then he/she is judged
to be more likely a member of that group. The heuristic is useful in
inductive reasoning.
• The use of this heuristic can systematically lead to make errors in judgements.
One such example is ‘base rate fallacy’. In an experiment by Tversky and
Kahneman, subjects were told that a profile of Jack is picked up from 100
profiles in which 30 are engineers and 70 are lawyers. Jack is 30 yr old man.
He is married and had no children. He is man of high ability and high
motivation and promises to be quite successful in his field. He is liked by his
colleagues. What is more likely occupation of Jack? Many responded Engineer.
While doing so they ignored very important information regarding base rate.
The base rate of engineers is 30% and so the probability of Jack being an
engineer can not be more than .30. This is called as base rate fallacy. Subjects
ignored base rates because they focused on representativeness. Hence,
representativeness heuristics can also lead to errors.
AVAILABILITY HEURISTIC
• . Now consider another, non-self-related question: Are you safer driving in a huge
• SUV or in a smaller, lighter car? Many people would answer, “In the big SUV,” think
• ing that if you are in an accident, you are less likely to get hurt in a big vehicle com
• pared to a small one. While that might seem to be correct, actual data indicate that
• death rates (number of deaths per 1 million vehicles on the road) are higher for SUVs
• than smaller cars (e.g., Gladwell, 2004).
• This example, and many similar judgment errors, illustrates the operation of the
• availability heuristic, another cognitive “rule of thumb” suggesting that the easier
• it is to bring information to mind, the greater its impact on subsequent judgments or
• decisions. Use of this heuristic makes good sense much of the time. After all, the fact
• that we can bring some types of information to mind quite readily suggests that it may
• indeed be frequent or important, so it should influence our judgments and decisions.
• But relying on availability in making social judgments can also lead to errors. Specifi
• cally, it can lead us to overestimate the likelihood of events that are dramatic but rare,
• because they are easy to bring to mind
• he availability heuristic is a phenomenon in which people predict the
frequency of an event, or a proportion within a population, based on
how easily an example can be brought to mind.
• There are situations in which people assess the frequency of a class or
the probability of an event by the ease with which instances or
occurrences can be brought to mind. E.g., one may assess the risk of
heart attack among middle-aged people by recalling such occurrences
among one's acquaintances. Availability is a useful clue for assessing
frequency or probability
ANCHORING AND ADJUSTMENT
• When people attempt to sell something—whether it’s a house or a
car, through an ad in a newspaper or online—they typically set the
“asking” price higher than they really expect to get. Likewise, buyers
often bid less initially than they expect to ultimately pay. This is
mostly because buyers and sellers want to give themselves some
room for bargaining. Often the selling price is the starting point for
discussion; the buyer offers less, the seller counters, and the process
continues until an agreement is reached. When a seller sets a starting
price, this is an important advantage related to another heuristic that
strongly influences our thinking: anchoring and adjustment.
• This heuristic involves the tendency to deal with uncertainty in
many situations by using something we do know as a starting point
(the “anchor”) and then making adjustments to it.
• The seller’s asking price provides such a starting point, to which
buyers try to make adjustments in order to lower the price they pay.
Lowering the price makes buyers feel they are getting a very good
deal in comparison to the original asking price.
• This too is how “sale pricing” and highly visible “reductions” work in
retail stores—the original starting point sets the anchor so shoppers
feel like they are then getting a bargain in comparison
SOURCES OF ERROR IN SOCIAL
COGINITION