Frugal Heuristics Instead of Mental Statistics

• Activity Number: 580
• Type: Topic Contributed
• Date/Time: Wednesday, August 7, 2013 : 2:00 PM to 3:50 PM
• Sponsor: Committee on Applied Statisticians
• Author(s): Peter Todd*+
• Companies: Indiana University
• Keywords: heuristics ; decision making ; rationality ; robustness

Abstract

Traditional views of rational decision making assume that individuals should make choices by using powerful mechanisms to process all of the information available. But given that human and animal minds have evolved to be quick and just "good enough" in environments where information is often costly and difficult to obtain, we should instead expect individuals to draw on an "adaptive toolbox" of simple, fast and frugal heuristics that make good decisions with limited information processing. These heuristics typically ignore most of the available information and rely on only a few important cues. And yet they make choices that are not only accurate when fitting their appropriate application domains, but are also more accurate than traditionally rational strategies when generalizing to new samples. Simple heuristics yield ecological rationality through their fit to particular information structures in the environment, and achieve their robustness in the face of change via stopping rules that limit the cues they consider and so avoid overfitting noise. People successfully employ a variety of these heuristics in tasks from two-alternative choice to satisficing sequential search.