ANALYSIS OF HEURISTIC METHODS AND DECISIONAL BIAS
Analysis Of Heuristic Methods:
The Influence of Cognitive Heuristics and Associated Bias On Rational Decision Making
The following essay attempts to analyze the influence of heuristics, specific strategies or shortcuts to speed thought using readily available information and perceptions to speed decision making, and the influence of bias emanating from the use of these heuristic methods that move us from accurate rational decision making, to non-optimal decision making. The concept of heuristics was introduced by Simon (1957) in his discussion of “limited rationality”, in which he argued that because of cognitive limitations, humans have little option but to construct simplified models of the world. Simon saw heuristics as adaptive strategies used by humans to cope with their limited information processing capacity (Shanteau). I will attempt to evaluate specific instances of bias as a result of heuristics, their effect on the decision making process, and make recommendations for avoiding such bias in cognitive decision making. One must understand the process of how decisions or judgments are made, and the influence of available time and information, as well as the relative importance of the decision within a particular process instance. Cognitive activity tends to process available information within a time frame, and then attempts to use reason to form an understanding or judgment of a situation or problem. When time and information are limited, or the importance of a decision is considered to have minimal risk, the use of heuristics helps to arrive at quick and typically reasonable decisions, to keep us from getting mired in these frequent day to day events. Unfortunately, the human mind tends to rely on these heuristic methods which lend themselves to bias, which in turn negatively influences important decision making, and can lead to faulty or non-optimal judgments. Research has identified and defined twelve biases linked to certain cognitive heuristics,
The Influence of Cognitive Heuristics and Associated Bias On Rational Decision Making
The following essay attempts to analyze the influence of heuristics, specific strategies or shortcuts to speed thought using readily available information and perceptions to speed decision making, and the influence of bias emanating from the use of these heuristic methods that move us from accurate rational decision making, to non-optimal decision making. The concept of heuristics was introduced by Simon (1957) in his discussion of “limited rationality”, in which he argued that because of cognitive limitations, humans have little option but to construct simplified models of the world. Simon saw heuristics as adaptive strategies used by humans to cope with their limited information processing capacity (Shanteau). I will attempt to evaluate specific instances of bias as a result of heuristics, their effect on the decision making process, and make recommendations for avoiding such bias in cognitive decision making. One must understand the process of how decisions or judgments are made, and the influence of available time and information, as well as the relative importance of the decision within a particular process instance. Cognitive activity tends to process available information within a time frame, and then attempts to use reason to form an understanding or judgment of a situation or problem. When time and information are limited, or the importance of a decision is considered to have minimal risk, the use of heuristics helps to arrive at quick and typically reasonable decisions, to keep us from getting mired in these frequent day to day events. Unfortunately, the human mind tends to rely on these heuristic methods which lend themselves to bias, which in turn negatively influences important decision making, and can lead to faulty or non-optimal judgments. Research has identified and defined twelve biases linked to certain cognitive heuristics,
References: Bazerman, M. H., & Moore, D. A., (2009). Judgment in managerial decision making. Hoboken, NJ: John Wiley & Sons Shanteau, J. (1989). Cognitive heuristics and biases in behavioral auditing: Review, comments and observations. Accounting, Organizations and Society, 14(1/2), 164-177. Simon, H. A., (1957), Models of man: Social and rational. New York, NY: Wiley