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Week 6: Heuristics

How do we make decisions under uncertainty? Take a shortcut!

 

What are heuristics?

Heuristics are simple mental shortcuts we use to make decisions. These help us when we don’t have the time to work through a decision comprehensively. We saw heuristics at play when we looked at Dual Process Theory: our System 1 (gut feeling) uses emotions for making snap decisions, though we often can’t tell what exactly which rule or heuristic our intuition is using. The affect heuristic, for example, means if you like the doctor who is treating you, you’ll be more likely to follow their suggestions, putting less weight on the evidence of what consequences (positive and negative) this will have. Or if you like a certain politician, you’ll be more likely to take what they say as true, and spend less time fact-checking (or no time — fake news, anyone?). Appealing to ‘common sense’ or what everyone else is doing (social proof) is also a heuristic: it’s a shortcut for determining the answer that’s easier than working it out from first principles, but not always the right answer. 

Examples of using heuristics

If events are easier to recall, our brains assume that they’re more likely to occur. Psychologists call this the availability heuristic, and it’s part of the problem with watching the news. We tune in to see vivid examples of people dying in plane crashes and shark attacks, but we never see all the cases of people not dying in these situations, which causes us to overestimate their likelihood.

Stereotyping is another example of a heuristic - one that can have serious damaging consequences. We see someone driving an expensive car, and assume they’re rich (but they could be a tow truck driver on a joyride). Someone sees a latino guy standing on the lawn of a fancy property, and wrongly assumes he’s the gardener rather than the owner. It might be that they’ve seen the offensive stereotype in movies, and other media, and their lazy System 1 relies on these misrepresentations to draw a snap conclusion.

The Rule of 72 is another heuristic - you divide 72 by the percent interest rate to determine the approximate amount of time it would take to double your money in an investment. For example, a 6% interest rate would double your money in 12 years (72/6=12).

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