Heuristics and Biases

To address how humans make decisions in the real world, a psychological theory arose in the 1970's that was termed Heuristics and Biases. This theory recognized that humans use simple rules or short-cuts for decision making, usually based on prior experience. However, instead of pointing out the utility of heuristics in real world decision making, this theory stressed the negative aspects of "rule-of-thumb" use. Heuristics and Biases theory contended that heuristics can result in systematic errors, as well as, lapses in reasoning and demonstrate human irrationality and fallibility. Again, the measure of human rationality and sound decision making was whether or not the laws of probability were followed. The resulting view of humans was one of irrational creatures who could not cope with the complexities of the real-world.*

Other theorists took a much more optimistic view of human-decision making and the use of heuristics. After all, human mental processes were well adapted to the real world environment with which human must interact. Why should decision-making be different? These theorists were interested in more "Naturalistic Decision-Making."

*Gigerenzer, G., Goldstein, D.G., "Reasoning the Fast and Frugal Way: Models of Bounded Rationality," Psychological Review, 1996, Vol. 103, No.4, 650-669. See also Goldstein, D.G., Gigerenzer, G., "Models of Ecological Rationality: The Recognition Heuristic," Psychological Review, 2002, Vol. 109, No.1, 75-90.