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Heuristics

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by

Step Choi

on 24 October 2013

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Transcript of Heuristics

Definition
Types of heuristics and Examples
How heuristics affects the decision making at work
Pros and Cons of heuristics

Heuristics
Fallibility of Human Minds
Types of Heuristics
2. Anchoring Heuristics
Types of Heuristics
3. Affect Heuristics

current emotion
such as fear, pleasure, surprise, etc.
influences decisions
Rely too heavily on the
first piece of information offered
(the "anchor") when making decisions
May cause
halo effect
Drawing a general impression about an individual on the basis of a
single characteristic
e.g. first impression
Warm up exercise
Flip a coin
SIX
times
Which of the following sequences is
more likely
?

1. T T T T T T
2. H T T H T H

Answer
People generally believe that the
Second Sequence
is more likely

In reality, the probability of each exact sequence is the
SAME
(1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 = 1/64)

Example
According to the test of
Consumer Council
Nivea,
the cheaper one is more effective
than the other one
In general, people will think that the
more expensive
one should be the
better
one
Not always TRUE


Which eye cream is more effective for reducing wrinkles?
Example
Advantages of Heuristics
How heuristics affect decision making at work place
Disadvantages of Heuristics
Employment Interview

Interviewers may make
inaccurate
perceptual judgments on candidates
Anchoring heuristics?
Availability heuristics?
Over-weight people LACK of discipline?
Using different interviewers to see
different things
in the
SAME candidate

Termination of the employee

Performance Appraisal
Many jobs are evaluated in
subjective
terms
Affect heuristics?
Availability heuristics?

Old people can't learn new skills?

Types of Heuristics
1. Representativeness Heuristic
Drawing a conclusion based on the extent to which some event
matches our expectations
Making judgement on
probability

Example
What do you think about Arabs?
Definition of Heuristics
is of
Greek
origin and means "discover"
techniques for
drawing conclusions
based on things we have
found or discovered
through prior experience
Example
4. Availability heuristics

looking at
other employment opportunities
outside the firm
= disloyal ?
judging
a management decision = disloyal ?

Doctor recommendation = Good toothpaste?
Group 4
Stephanie Choi
Alice Tang
Sophia So
Wendi Ip
James Savory

Example
A boss may
fire the employee
because of
anger
but not the competencies of employee
Making
wrong
decision easily

Cognitive bias
Deviations in judgement that result in distorted, inaccurate and illogical conclusions
Unfair
to individuals

Use in marketing: Manipulative/unethical?
Loss of promotion opportunity due to
representativeness heuristic
?
women are less capable?
Halo effect
due to the anchoring heuristics
May cause conflict
Types of Heuristics

5. Authority heuristic
Someone
believes
the opinion just because the individual is an
authority figure
especially about science, politics, and education

Advantages
Make
fast and simple
decision
useful when facing
complex
problems or
incomplete
Information
Example
Advertisement
stated that
the
milk powder
can increase infant’s
intelligence, eye-sight, ability to memorize, creativity

Example
However...

The Society of Hospital Pharmacists of Hong Kong
proved that those advertisement are
exaggerated!!
Experiment and Other Example
Example
Types of Heuristics
When a person judge a situation on the basis of the
examples that readily come to mind
Mosquitoes: 655,000
Hippos: 2,900
Deer: 130
Bees: 53
Dogs: 30-35
Ants: 20-50
Cows: 22
Horses: 20
Spiders: 6.5
Sharks: <1
Sharks kill more people?
Types of Heuristics
6.
When asked to make
several choices
at once, people tend to
diversify
more than when making the same type of decision sequentially.
Halloween Trick or Treat
Scenario 2 (Simultaneous choice)

Children enter
a house

and are allowed to pick
2
candies

Every child
select
one of each
type !!!!
Advantages
For the marketing department
Use
authority heuristics
in advertisement
Use
anchoring heuristics
to increase sales
Halloween Trick or Treat
Offering
2 types
of candy in each house
Scenario 1 (Sequential choice)

Children enter
two houses sequentially
and are allowed to pick
1
candy in
each house

48%
children

select
one of each type
52%
children select
the same type

Diversification heuristic
Offering
2 types
of candy in each house
Experiment Time!
Which bottle of water taste better?
Full transcript