Dealing with heuristics in decision making

Dealing with heuristics in decision making

Posted by Jeremiah Genest on Sep 1, 2019 9:51 pm

Heuristics are cognitive behaviors that can influence how individuals make judgments in the face of uncertainty, and they can be a source of significant bias and errors in judgment. Heuristics are akin to cognitive rules of thumb; they can influence how individuals make judgments in the face of uncertainty. The potential adverse effects of such heuristics when iden­tifying potential negative events and their probabilities needs to be counteracted when engaging in decision-making, problem solving and risk management. We need to add elements to these processes to ensure we navigate potential pitfalls from heuristics.

For example, Brainstorming is often used throughout our organizations, and everyone things they understand this easy process (“All you do is throw out ideas!”), which means is often no documented means or clear guidance in place for performing the activity. Because it relies on our cognitive behaviors, brainstorming is particularly prone to problems of subjectivity and uncertainty. We need to counteract any factors that can introduce bias, error, or uncertainty during brainstorming activities.

There are a lot of types of heuristics, here are three of the big ones.

The Heuristic of Anchoring and Adjustment

This heuristic affects how people make decisions, not only when estimating the probability of an event occurring but also when forming personal opinions about a diverse range of activities, such as the risks presented by nuclear and other forms of electricity generation. When this heuristic is in operation, people’s judgment can be heavily influenced by the first approximation of the value or quantity that they think of or hear, or even by the view of a group to which the person is affiliated.

The Heuristic of Availability

The heuristic of availability affects how people estimate the probability of an event occurring. A person’s probability judgment is often determined by the ease with which people can think of previous occurrences or the ease with which they can imagine the event occurring. People find it easier to recall or imagine dramatic, uncommon events (such as deaths from botulism) over more mundane, common events (such as deaths from stroke). This can cause people to sometimes over estimate the frequency of an event, where recall or imagination is enhanced, and to under estimate the frequency of an event where recall or imagination is difficult. In contrast, people tend to make reasonable estimates of event frequencies when their experience and memory of observed events corresponds well with actual frequencies.

The Heuristic of Representativeness

This heuristic is when we estimate the likelihood of an event by comparing it to an existing prototype that already exists in our minds. Our prototype is what we think is the most relevant or typical example of an event or object. A person’s probability judgment is often influenced by expecting in the small behavior that which one knows exists in the large. When this heuristic is in operation, people can pay too much attention to the specific details, while ignoring or paying insufficient attention to important background or contextual information that is relevant to the problem at hand.

Strategies to Avoid Heuristics During Brainstorming
  1. Educate teams on heuristics. At the beginning of the brainstorming session, the team leader should briefly explain to the team the ways in which cognitive heuristics are thought to affect human judgment and decision-making. A lot of research shows that explaining to participants the psychology of judgments helps alleviate the problems heuristics can bring.
  2. Counteracting the Heuristic of Anchoring and Adjustment. Start the meeting, and make sure to remind folks as you go with the ground rule of avoiding weighing, measuring or other quantitative measures during brainstorming until each member of the team has a) had an opportunity to consider the facts for him or herself, b) formed their own initial opinion or judgment on the issue at hand, and c) written their opinion or judgment down. While this strategy will not likely overcome anchoring effects as a result of the initial value or opinion thought of or formulated by the individual in his/her own mind, it may help to reduce the effects caused by anchoring and adjustment because each team member has a chance to form his or her own opinion or judgment before hearing that from other team participants.
  3. Counteracting the Heuristic of Availability. Identify an individual with direct, real experience and utilize them as an opinion leader.
  4. Counteracting the Heuristic of Representativeness. The team leader should ensure that the team focuses its attention on the item under study, and that it is not too heavily influenced by the expected behavior of the larger class of objects that may contain the item under study, unless there is good reason to do so.
In short, the facilitator/team leader should always strive to reduce the harmful effects of heuristics by:
  • Seeking the opinions of actual users and operators of the process or other item under study.
  • Seeking the opinions of those employees or others who are knowledgeable in the process or other item under study.
  • Considering the concerns of stakeholder groups when considering what might go wrong with a process or other item under study.
What are your experiences and best practices for dealing with heuristics in decision making?

Re: Heuristics and Cognitive Biases

Posted by Jeremiah Genest on Sep 8, 2019 1:47 pm

Cognitive biases refer to systematic mistakes that derive from limits that are inherent in our capacity to process information. Because we are not capable of perceiving everything in our environment, our focus is automatically drawn to the most prominent or “eye-catching”—that is, perceptually salient—stimuli. This can lead us to formulate biased and inaccurate causal attributions (Taylor & Fiske, 1975). Specifically, we are prone to equate the most perceptually salient stimuli with the most causally influential stimuli. 

Shiraev, E. B., Shiraev, E. B., & Levy, D. A. (2016). Cross-cultural psychology: Critical thinking and contemporary applications. Taylor & Francis.

A systematic error that results from the use of a heuristic is called a cognitive bias

While the use of heuristics of can lead to cognitive biases, not all cognitive biases are the result of heuristics. Generally, however, when an error in judgement or belief is identified empirically or anecdotally, there will be an attempt to account for it using heuristics.​​​​​​​

When the correct answer is described, they see for themselves how their own judgment is biased in systematic ways. Such personal demonstrations make Tversky and Kahneman's points in a salient, simple, and powerful way. What was innovative about their work was that it drew a connection between heuristics and biases: A heuristic is a rule of thumb used as such in different contexts. A cognitive bias is a systematic error in our thinking.

Morvan, C., & Jenkins, W. J. (2017). Judgment Under Uncertainty: Heuristics and Biases. CRC Press.

Re: Dealing with heuristics in decision making

Posted by Jeremiah Genest on Nov 12, 2019 10:50 am

Great article by McKinsey "Bias busters: Avoiding snap judgments" that discusses the halo effect, the tendency for individuals to make specific judgments based on overall impressions.

This is part of a collection of bias busters.