# Heuristics and biases

Essay by realdeal1011University, Bachelor's March 2006

Introduction

We make many decisions in our everyday activity, and sometimes we are more or less logical about them. The decision that we make are based on beliefs concerning the possibility of uncertain events such as the outcome of an election.

However what determines these beliefs? How do we measure the probability of an uncertain event? This essay will show that we rely on certain heuristic principle in order to guide us make the best decision. In general these heuristics can be useful, but can lead to severe and systematic errors.

Most of us live in a world of full inboxes and shifting deadlines. We often need heuristics (a mental shortcut or rule of thumb) and biases as a way of navigating the information, decisions and choices. A heuristic might help us to find solutions which are good, but perhaps not the very best they can be.

Representativeness

The representativeness heuristic is based on the fact that we tend to judge events by how much they resemble other events with which we are familiar.

In so doing, we ignore relevant facts that should be included in our decision making process, but are not.

The use of this heuristic can, however, systematically leads one to make poor judgements in some circumstances.

One of the factors that have no effect on representativeness but should have a major effect on probability is the prior probability, or base-rate frequency, of the outcomes. For example John is a street-wise outgoing person who talked quickly and wore smart clothes. What is the probability that John is a salesman? If you judge him to be representative of what salesmen are like, that is he fits your stereotypical view of a salesman, then you would assume that his chances of being a salesman are high.

If people evaluate...