Decision Making / 1 / 1.5 / 1.5.1

1.5.1 Human Decision Making—Bounded Rationality And Heuristics In Quick Decisions

Klein (1998) finds that decision makers use naturalistic decision making⁴ as the primary basis for their decisions, and this is backed up by mental simulation to imagine how strategies resulting from their choices might be played out. Klein’s observations come from many years of research, much of which has been undertaken with the support of the US Army in the context of decision making under pressure of time and when information is limited. It is somewhat disturbing, as Klein (1998) argues, that the decision strategies most frequently used for decisions under pressure of time, or in the absence of information, are also used by decision makers when facing complex dynamic problems. New evidence coming to hand, such as that recently published by Gigerenzer, et al. (1999) supports Klein’s view that naturalistic decision making is also frequently used to make strategy choices.

One consequence of applying naturalistic decision making in complex, dynamic situations is that the insidious aspects of dynamic complexity can stack up unfavourably against it. Gigerenzer, et al., (1999) investigated how we use the mental short-cuts in our cognitive adaptive toolbox in everyday situations. Research suggests:

‘In the real world, a good decision is less about finding the best alternative than finding one that works. Herbert Simon of Carnegie Mellon University in Pittsburgh was one of the first to recognise this in the 1950s when he coined the term “bounded rationality”. He pointed out that the way any animal thinks depends on its cognitive limitations and the environment in which it lives. … Simon’s ideas have become fashionable in recent years, and the Berlin researchers (Gigeranzer, et al.) are leading the renaissance. They point out that our minds like our bodies have been shaped by evolution: we have inherited ways of thinking from those of our ancestors whose mental tools were best adapted for survival and reproduction.’

No time then for careful calculations—a cogitating ancestor would have risked losing dinner, a mate or even his life. Instead, our mental tools are fast and frugal. They allow us to make decisions based on very little information and using simple rules. Each tool, or heuristic, is designed to resolve a certain type of dilemma under certain circumstances… Although they apply to different sorts of problems, heuristics have a common structure, which arises from the way humans make decisions. First, we search the environment for information, or cues, upon which to base a choice. A heuristic contains rules that direct the search. Next, we must stop searching. It’s pointless trying to find out everything there is to know about a nut or berry if we starve in the process. Heuristics contain a stopping rule, often ending the search after only a few cues have been considered. Finally, we must make a choice—eat, run, mate, attack (New Scientist, 1999: 30-35).’

The heuristics identified by Gigerenzer’s research team include (work on heuristics and biases by Kahneman and Tversky and others is acknowledged, noting that the purpose here is to illustrate relevance rather than to review the cognitive-psychology body of knowledge):

• Recognition heuristic. This involves choosing ‘the familiar’ as the only cue worth considering. In many situations, simply choosing what you recognise will work better than choosing at random. It was found that knowing more, or having additional information made available, was not helpful when the Recognition Heuristic was invoked.
• Minimalist heuristic. This involves searching through a sequence of cues until one is found which distinguishes between alternative courses of action. Minimalist Heuristic is perhaps the natural progression from the Recognition Heuristic.
• Take-the-best heuristic. This heuristic uses the cues in order of importance, stopping the search as soon as one cue distinguishes between the possible choices.
• Categorisation-by-elimination heuristic. This uses a succession of cues to whittle away the alternatives until only one remains.
• Satisficing heuristic. This involves stopping and making a choice when what Simon calls ‘satisficing’ occurs. In these situations we set ourselves aspiration levels—which may alter over time—and stop looking only once these have been achieved.

Whilst the use of heuristics does not always produce the best results, the research team found that:

• heuristics work surprisingly well in a broad range of situations;
• not only do they allow us to choose between alternative courses of action, they also work when choice doesn’t come with all the options up front, in which case it becomes necessary to search for all the options as well as the cues with which to distinguish between them;
• people tend to use more calculated reasoning when they can take their time; and
• heuristics come into their own when people are forced to think on their feet.

The line between deliberate decisions, involving careful consideration, and those involving judgement and intuition, where heuristics are invoked, can be blurred.