We make decisions every single day of our life both large and small. Most of them are minor, and we make them unconsciously. Alternatively, we go through a structured, rational decision-making process every time we have to make a more significant choice. And as much as we like to believe that we make our choices based on logic and rationality, in reality, we don’t think through every possible scenario for every possible decision. And rely on many heuristics to make decisions more quickly and effortlessly.
Truly successful decision-making relies on a balance between deliberate and instinctive thinking. —-Malcolm GladwellTweet
Heuristics vs biases
A Heuristic is a mental shortcut that we use to make quick intuitive decisions about daily activities. They are a cognitive tool we use to facilitate decision-making. However, they must not be mistaken for biases. Biases are different from heuristics in some fundamental way. Cognitive biases are generally distorted misrepresentation of reality. They are a belief or an influence and are based on preference and/or on desired public perception.
Heuristics on the other hand are oversimplified evaluations of situations that are based on experience and/or learned lessons from others. They allow us to make intuitive judgments without having to take more time and without having to consider every single aspect.
We use them because they provide short-term solutions, and speed up our decisions making process. They reduce our cognitive load and complexity. As a matter of fact, certain decision heuristics lead to some cognitive biases and thinking, if misapplied.
Why do we take mental shortcuts to make decisions?
As humans, our cognitive resources are limited because of various factors such as the time we have to make the decision, the availability of information, thinking ability and biases. In order to avoid wasting resources, save time, and energy, our minds are wired to taking mental shortcuts.
We tend to engage in two types thinking while making decisions. System 1 thinking that is intuitive where we are fast, autonomous, context dependent and is error prone. And System 2 thinking is more of rational, slow, deliberate, reflective and involves few errors. Since the normal state of our mind is mostly intuitive and instinctive, thinking through every possible scenario seems to be a bit more complex.
When information is more easily accessible, recognisable or familiar, we are more likely to use that information to make a quick decision, rather than engage in System 2 thinking. And we tend to use these mental shortcuts based on how recently and distinctly something has impacted us.
Also, for every decision we make, we don’t always have the time or resources to compare all the information before we make a choice. Hence when faced with a complex problem, we simply rely on heuristics in order to access our intuitive judgment.
Types of Heuristics
According to Psychologists Daniel Kahneman and Amos Tversky, there are several types of heuristics we use in our everyday decision-making. Each of these heuristics plays a significant role in the way how our decisions are made. Heuristic reasoning involves the consideration of multiple factors to create some parameters that help us to decide. Here are some of the mental shortcuts that we frequently use and each one applies a different criteria to make a decision.
- Familiarity: This mental shortcut is for situations that are overwhelming and cognitively difficult to manage. So you use things you are more accustomed to aid your decision-making. This is based on the assumption that the person, thing, or situation you know is always going to be as you remember. It prompts you to fall back on ideas or patterns you are familiar with, or those you consider to be safer rather than choices you are less familiar with. An everyday example of this heuristic in play would be going for the most familiar brands while shopping your daily needs.
- Availability: We make decisions based on what is readily available in our memory. When using this heuristic, we judge the likelihood of a situation based upon how quickly we can recall similar events. We tend to draw on readily available information from our past experiences or choices that have been appropriate, habitual and successful. For instance, When it comes to making decision about relative risk or uncertainty, we rely on a number of available strategies, information and resources.
- Representative: Judgments are made by assessing how similar the present situation in comparison to a familiar mental prototype. Because we do not possess an accurate ability to make out the value of something in isolation, we tend to determine its value by comparing and contrasting one thing to another. What you know or familiar becomes the representative of that which you don’t know. This heuristic is often used when we meet a new person for the first time where they may remind you of someone else you know.
- Affect: This involves making choices that are influenced by the emotions we experience in that moment. Most often, we rely on a ‘good’ or ‘bad’ feeling in making a decision trusting our intuition to make quick judgment calls. However, there is no objective evidence to support the choice we make, as it is just based on a feeling. For instance, you are not in the mood to try something new, so you order a familiar dish instead.
- Anchoring and Adjustment: This is a cognitive heuristic that influences our intuitiveness in assessing probabilities. We sometimes make choices based on the first piece of information we receive. This acts as an anchor or the reason why we make the decisions we make. We either use anchors as our frame of reference to refer back to or to adjust.
- Satisficing: This heuristic is used where you select the first option that satisfies your decision criteria, regardless of whether there are other options that are possibly better. That is to say, you are satisfied that this option is sufficient as it is close enough to your ideal. For instance, choosing an option that is close enough to what you had in your mind and are satisfied with.
Are heuristics helpful or unhelpful?
Heuristics lead to faster solutions and help you to be more decisive and make choices based upon the knowledge you already have. There are times when it’s necessary to make a decision without having all of the information and facts you may like. That is when heuristics come to our aid in making faster decisions.
Heuristics are generally a positive habit of our minds when we may not have the time or energy to research all the potential options. They are time-saving than rational decision-making that involves lengthy process of logical reasoning. But as useful as they can be, they are imperfect and each comes with a built-in-bias and hinder analytical thinking.
We rely on these mental shortcuts even when in the context of experiences, emotions, attitudes and points of view. As a result, our decisions become very dependent on what the options are and how they relate to each other. Since the relationship between and among different choices also can affect our ability to decide.
Also, there are times when you become dependent on heuristic as it is easier, takes less time and effort. You may get tempted to use it even when it may or may not lead to a good decision.
Here are some more disadvantages of three most widely accepted heuristics.
The Representative Heuristic
Making decisions based on this mental shortcut involves comparing the probability of the situation or person or product that you are not familiar with to something that is similar and familiar with. When we are trying to assess how likely a certain event is probable, we base our decision by assessing how similar it is to an existing concept we already have in mind.
Though this can speed up your decision making process, it can lead to inaccurate assumptions. If something has worked well in the past, it doesn’t mean it is the right choice for every situation. Because we rely on existing model and if it doesn’t sufficiently account for the current situation, it can lead to incorrect suppositions,
This heuristic can lead to inaccurate impression of data or information, and of people, where we overemphasise similarity and ignore other relevant information. This can lead to stereotypes and to make preconceived judgments where you think how a particular situation might play out or how people in certain roles might behave.
How to avoid? Because categorisation is based to our perception of the world, it is difficult to completely avoid it. However, being aware of it when you are using it can help you correct your judgement. Applying logical thinking and applying critical reasoning skills might be useful to get around this heuristic.
The Availability Heuristic
Most often, we go for related events or situations that might immediately come to the forefront. This can be helpful when we lack time or resources, but can lead to errors in decisions. But when we take things that come to mind more easily at the moment of making a decision, we give importance to those things and tend to overestimate the likelihood of similar things or outcomes in the future.
According to research, the availability heuristic often leads to risk-averse behaviour. You may try to avoid risky situations, even if those risks are most unlikely. Since this mental shortcut can cause you not to consider all the facts with equal weight, it can lead to making wrong assumptions.
The longer you stay occupied with the event, the more available it will be in our mind and more probable we believe it to be. Because certain things or situations happen to be more available in our memory, it leads us to incorrectly assume that situation is much more common than it really is.
How to avoid? Avoid making impulsive decisions. When making a decision, think about, what is informing your decision? Where is your judgment of the situation coming from? Considering only recently available information can skew your perception of reality. Before deciding take a look at long-term trends and patterns.
Don’t rely only on people close to you to understand the probability of something, or from small samples of information, but increase your research base to seek out other perspectives. Consider all the facts, and seek out information from sources that don’t necessarily line up with your personal beliefs.
Anchoring and Adjustment Heuristic
According to this heuristic, we tend to employ a certain starting point, the anchor and make adjustments until we reach a desired outcome. This is when we rely on facts provided before a decision or an estimation is made. However, when we focus around one piece of information while making a decision, we tend to make an inaccurate final estimate.
This can lead to inaccurate judgement when an individual or a group relies heavily on first piece of information they encounter about a decision. The decisions thus made get unduly influenced by the particular reference point they base on. This can cause alternatives to be clustered around the ‘anchor’, making one less focused on other estimates, possibilities or wider range of other alternatives.
Interpreting newer information from the reference point of our anchor can skew our judgment. When we are anchored to a specific figure or plan of action, we end up filtering all new information through the framework we initially drew up in our head, distorting our thinking. This makes us reluctant to make significant changes, even if the situation calls for it. For instance, when we are setting a schedule for a project or trying to decide on a budget, we tend to cling to a particular number or value, even when it is irrational.
How to avoid? Like all biases, this too happens subconsciously and avoiding it is not entirely possible. One way to avoid is keeping your decisions evidence-based, and straightforward and to come up with reasons why the anchor is not appropriate for the situation. Considering alternative options might reduce its impact.
Questions for Self-Reflection
How often do you use heuristics in your decision-making?
Are you aware of the heuristics that are influencing your most significant choices?
Do you solely rely on available information ? Or Do you take time to research the facts?
How often do you consider information that disagrees with what you already familiar with?
Are you open to alternative perspectives that are not similar to those of what you already know?
Our own feelings, motives and desires determine what we say ‘yes’ to and what we say ‘no’ to. But no matter how self-aware we become of them, we still can’t make the ideal choice every single time. Though without heuristics, we would have hard time making the simplest of decisions, they are also imperfect at times.
So, when it comes to making effective decisions in the context of your relationships or problem solving, personally, socially or professionally, it is important to become aware of how these heuristics influence the choices you make. Understanding the benefits, limitations and risks of mental shortcuts, you can avoid making poor decisions. Becoming more aware of your tendency that you are using heuristics, you are often more able to correct yourself and make more accurate judgments.
More posts related to decision-making.
How to avoid making bad decisions
What is the opportunity cost of your decisions?
What is group think and how to minimise it
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