The heuristics-and-biases program
According to the heuristics-and-biases program, we form judgments by using
heuristics – functional but imperfect rules of thumb or
mental shortcuts that help us form opinions and make decisions quickly. Here are
four prominent heuristics:
Anchoring and adjustment
The anchoring-and-adjustment heuristic instructs you to pick an
initial estimate (anchor) and adjust the initial estimate up or down (as you see
fit) in order to come up with a final answer. Therefore, estimates will
(imperfectly) track the anchors – even when irrelevant or uninformative.
Representativeness
The representativeness heuristic tells you to estimate the
probability that some outcome was the result of a given process by reference to
the degree to which the outcome is representative of that process: the more
representative the outcome, the higher the probability.
Availability
The availability heuristic makes you assess the probability that
some event will occur based on the ease with which the event comes to mind: the
easier it comes to mind, the higher the probability.
Affect
The affect heuristic gets you to assign probabilities to
consequences based on how you feel about the thing they would be consequences of:
the better you feel about it, the higher the probability of good consequences and
the lower the probability of bad.
Bias
The heuristics-and-biases program does not say that people are dumb: to the
contrary, it says that following heuristics is a largely functional way to make
speedy decisions when it counts. Because the heuristics are imperfect, however,
they can lead to bias, that is, systematic and predictable error.
Angner (2016): A Course in Behavioral Economics,
2nd ed.