What are Heuristics?

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Definition:

Heuristics are shortcut strategies for solving problems that produce a satisfactory, if not perfect, solution.

🤔 Understanding heuristics

Heuristics are a way to come to a satisfactory solution to a problem much more quickly than it would take to come up with a perfect answer. Often, people need to make decisions in a limited time. Heuristics make it far easier to do this by providing a framework that does not require analyzing every facet of a situation or problem. Instead, the person applying the heuristic technique uses a practical mental shortcut to come up with a solution that works, even if it isn’t perfect. Heuristics can often be helpful but sometimes lead to errors or biases.

Example

One example of a heuristic technique is representativeness heuristics. This method involves making assumptions about a person or object based on how closely they match our existing ideas of how members of a category look or behave. For instance, if you see a beefy man wearing a helmet and jersey, you might assume that he plays football based on your mental image of what football players typically look like.

Takeaway

Heuristics are like a rule of thumb…

A rule of thumb is a mostly accurate generalization you can use to make decisions. For example, you might follow a rule of thumb that says you should keep an emergency fund with three to six months of living expenses. It’s probably a good idea in most cases, but it isn’t an absolute rule, and there may be times when having a smaller emergency fund makes sense. In the same way, heuristics are decision-making shortcuts that work most of the time but aren’t perfect.

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What are heuristics?

Heuristics are problem-solving strategies that help people make decisions quickly and effectively. Heuristics rely on shortcuts, frameworks, rules of thumb, and previous experiences to help people make mostly accurate choices. Heuristics often produce correct decisions, but they’re not perfect. Still, the time savings they provide over a full analysis of a situation generally makes up for the occasional incorrect choice they lead to.

People use heuristics all the time, even if they aren’t aware that they’re doing it. If you see a quiet person wearing glasses at a library, you might assume that he or she is bookish and intelligent based on appearance and the context. That’s an example of representativeness heuristics.

Developing heuristics may have been an evolutionary advantage for humans. For example, the familiarity heuristic tends to make people feel safer around things and places they’re familiar with. That could have prevented early humans from wandering into threatening situations or interacting with dangerous animals. However, the same heuristics that helped humans in the past can produce negative results in the modern world. Familiarity heuristics can discourage people from interacting with people who don’t look like others they know, which can encourage racism and lack of diversity.

Recognizing heuristics and understanding their advantages and drawbacks can help you make the most of their decision-making power while steering clear of pitfalls.

What are the advantages and disadvantages of using heuristics?

Heuristics can be helpful tools, but they also come with drawbacks.

Advantages

The primary advantage of heuristics is that they help people make decisions quickly and with minimal effort. When people are under pressure or face information overload, they don’t have time to consider every facet of a situation and all possible choices. Heuristics give them a way to make a generally good decision faster.

Think about your most recent grocery shopping trip. If you had to examine every apple to find the ripest one, shopping would take hours. Even if you get a less-than-perfect apple, the time you saved is worth the trade-off.

Heuristics can be especially helpful in situations where people experience time pressure. When driving, you sometimes need to make snap decisions. If a squirrel runs in front of you, do you slam on the brakes, try to swerve around it, or keep driving? Depending on the situation, such as oncoming traffic or whether someone is tailgating you, your choice can have significant consequences. Not making a decision leads to a separate set of results, so you have to decide, even if you don’t have time to analyze every aspect of the situation.

Evolutionarily, heuristics helped humans avoid danger. If you hear a growl in the bushes, it makes sense to jump to conclusions and run, rather than waiting for all the evidence that a tiger is lurking.

Disadvantages

The downside of using heuristics is that they aren’t perfect. Sometimes, heuristics result in mistakes and biases. For example, representativeness and familiarity heuristics can lead people to form cliques or exclude others that don’t look like them.

An example of heuristics gone wrong is when someone relies exclusively on authority heuristics to choose investments. An investor might follow the advice of a broker or a financial guru on TV, trusting blindly in their expertise. That could lead to decisions that aren’t right for the investor’s personal situation and risk tolerance.

What are some heuristics?

Here are some of the common heuristics that people use:

Educated guess

Sometimes, when you have to make a decision, you don’t have all of the information available to produce a perfect answer. Instead, you have to use what you know to get as close to the solution as possible. You can make an educated guess based on the data you have and the options you rule out. For example, if you’re taking a multiple-choice exam and a question has four possible answers, you can make an educated guess after ruling out one of the options.

Authority

If you’re in school and your teacher tells you that something is true, you’re likely to believe it because the instructor is in a position of authority. Similarly, if a doctor gives you a medical diagnosis, his or her authority makes you more likely to trust the information.

Availability

The availability heuristic helps people make decisions based on information that immediately comes to mind. For example, an investor might decide to buy stock in a pharmaceutical company because he or she recently saw a news report about strong performance in that industry. The investor may pay less attention to other facts relevant to the decision because they don’t come to mind as easily.

Representativeness

Representativeness heuristics involve making assumptions about people or things based on their looks, actions, or how they describe themselves compared to members of certain groups. For example, you might assume someone wearing a jersey is a fan of sports or that someone wearing a suit has a corporate job.

Anchoring

Anchoring heuristics involve making assumptions and choices based on the first piece of information that you encounter. For example, if you’re trying to buy a house, and the first home you visit is listed for $500,000, you might assume that other houses will cost a similar amount.

Consistency

People who use consistency heuristics tend to act similarly when presented with different situations. They try to stay consistent in their actions. For example, a hockey coach may send out the same starting lineup for every game because that’s what the team has always done.

Consistency heuristics also apply to decisions made based on the apparent consistency of others. For example, if you’re concerned about giving out your Social Security number to sign up for a credit card, but every card issuer requires it, you might decide that giving out the number is normal in this situation.

Contagion

This heuristic causes people to avoid an entire class of items or areas because of the assumption that they are “contaminated” by something bad. For example, if one farm recalls its beef products due to a bacterial outbreak, you might avoid all beef products, even those from other farms. Or you could assume that a house where a murder happened is forever tainted by those events.

Working backward

This heuristic starts with the assumption that you already solved the problem. You work backward from the solution to the current situation. For example, someone taking a multiple choice test could work backward from each answer to try to figure out which one is correct.

Scarcity

People tend to assign a higher value to scarce resources and a lower value to things that are plentiful.

How are heuristics used in marketing?

Marketers can take advantage of heuristics when designing campaigns and other strategies to reach consumers.

For example, marketers can use representative heuristics when designing packaging for their products. If they make their products look sleek and similar to high-quality competitors, shoppers may assume their goods are also high-quality. Availability heuristics lead people to make decisions based on information that immediately comes to mind. If marketers provide positive information about their products in prominent campaigns or at the point of sale, buyers may be less likely to recall negative information.

Marketers can also create an illusion of scarcity by saying something is available for a “limited time only” or in a “limited edition.”

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