scholarly journals Integrating Fast and Frugal Heuristics with a Model of Memory-based Cue Generation

2018 ◽  
Vol 31 (4) ◽  
pp. 487-507 ◽  
Author(s):  
Ashley Lawrence ◽  
Rick P. Thomas ◽  
Michael R. Dougherty
Keyword(s):  
Fast And Frugal Heuristics ◽  
Cue Generation

Rationality, logic, and fast and frugal heuristics

2000 ◽  
Vol 23 (5) ◽  
pp. 744-745 ◽  
Author(s):  
José Luis Bermúdez
Keyword(s):  
Probability Theory ◽  
Real World ◽  
Fast And Frugal Heuristics ◽  
Take The Best ◽  
Decision Performance ◽  
Deductive Logic ◽  
Traditional Norms

Gigerenzer and his co-workers make some bold and striking claims about the relation between the fast and frugal heuristics discussed in their book and the traditional norms of rationality provided by deductive logic and probability theory. We are told, for example, that fast and frugal heuristics such as “Take the Best” replace “the multiple coherence criteria stemming from the laws of logic and probability with multiple correspondence criteria relating to real-world decision performance.” This commentary explores just how we should interpret this proposed replacement of logic and probability theory by fast and frugal heuristics.

HARNESSING HEURISTICS FOR ECONOMIC POLICY

2018 ◽  
Vol 34 (2) ◽  
pp. 135-163
Author(s):  
Ramzi Mabsout ◽  
Jana G. Mourad
Keyword(s):  
Economic Policy ◽  
21St Century ◽  
Decision Makers ◽  
Policy Implications ◽  
Evidence Based ◽  
Fast And Frugal Heuristics ◽  
Changing Environments ◽  
Effective Decision ◽  
Biases And Heuristics ◽  
Behavioural Sciences

Abstract:The effectiveness of heuristics has received contradicting interpretations in the behavioural sciences. We study the policy implications of two programmes that dispute the effectiveness of heuristics – the biases and heuristics and the fast and frugal heuristics programmes. While the first blames heuristics for most errors in judgement, the second posits heuristics as simple mental algorithms that work well in a range of environments. We argue that the fast and frugal programme is less paternalistic insofar as it models humans as effective decision-makers in a range of environments. However, in the rapidly changing environments of the 21st century, both are needed to inform evidence-based policies.

Heuristics in financial decision-making: the selection of SME financing by advisers in an increasingly diverse market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kirsten Rauwerda ◽  
Frank Jan De Graaf
Keyword(s):  
Decision Making ◽  
Structured Interview ◽  
Ecological Rationality ◽  
Personal Network ◽  
Research Attention ◽  
Content Type ◽  
Less Is More ◽  
Fast And Frugal Heuristics ◽  
Wide Range ◽  
Simple Rules

PurposeIn order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).Design/methodology/approachThe authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.FindingsWithin their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.Research limitations/implicationsThe study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.Practical implicationsThe authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.Originality/valueThe study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.

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