What are heuristics and how do they help us make decisions?

Alicia Raeburn contributor headshotAlicia Raeburn17 marca 202314 min czytania
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Summary

Heuristics are simple rules of thumb that our brains use to make decisions. When you choose a work outfit that looks professional instead of sweatpants, you’re making a decision based on past information. That's not intuition; it’s heuristics. Instead of weighing all the information available to make a data-backed choice, heuristics enable us to move quickly into action—mostly without us even realizing it. In this article, you’ll learn what heuristics are, their common types, and how we use them in different scenarios.

Green means go. Most of us accept this as common knowledge, but it’s actually an example of a micro-decision—in this case, your brain is deciding to go when you see the color green.

You make countless of these subconscious decisions every day. Many things that you might think just come naturally to you are actually caused by heuristics—mental shortcuts that allow you to quickly process information and take action. Heuristics help you make smaller, almost unnoticeable decisions using past information, without much rational input from your brain.

Heuristics are helpful for getting things done more quickly, but they can also lead to biases and irrational choices if you’re not aware of them. Luckily, you can use heuristics to your advantage once you recognize them, and make better decisions in the workplace.

What is a heuristic?

Heuristics are mental shortcuts that your brain uses to make decisions. When we make rational choices, our brains weigh all the information, pros and cons, and any relevant data. But it’s not possible to do this for every single decision we make on a day-to-day basis. For the smaller ones, your brain uses heuristics to infer information and take almost-immediate action.

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How heuristics work

Heuristics are mental shortcuts based on information your brain naturally gathers and stores as you go about your day. Your brain uses these heuristics to form biases, so it knows what to decide when presented with similar situations. This works fine for smaller, everyday scenarios—but not ones that require major problem-solving.

For example, if you’re making a larger decision about whether to accept a new job or stay with your current one, your brain will process this information slowly. For decisions like this, you collect data by referencing sources—chatting with mentors, reading company reviews, and comparing salaries. Then, you use that information to make your decision. Meanwhile, your brain is also using heuristics to help you speed along that track. In this example, you might use something called the “availability heuristic” to reference things you’ve recently seen about the new job. The availability heuristic makes it more likely that you’ll remember a news story about the company’s higher stock prices. Without realizing it, this can make you think the new job will be more lucrative.

On the flip side, you can recognize that the new job has had some great press recently, but that might be just a great PR team at work. Instead of “buying in” to what the availability heuristic is trying to tell you—that positive news means it’s the right job—you can acknowledge that this is a bias at work. In this case, comparing compensation and work-life balance between the two companies is a much more effective way to choose which job is right for you.

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History of heuristics

The term "heuristics," originating from the Greek word meaning “to discover,” has ancient roots, but much of today's understanding comes from twentieth-century social scientists. Herbert Simon's research into "bounded rationality" highlighted the use of heuristics in decision-making, particularly under constraints like limited time and information.

Daniel Kahneman was one of the first researchers to study heuristics in his behavioral economics work in the 1970’s, along with fellow psychologist Amos Tversky. They theorized that many of the decisions and judgments we make aren’t rational—meaning we don’t move through a series of decision-making steps to come to a solution. Instead, the human brain uses mental shortcuts to form seemingly irrational, “fast and frugal” decisions—quick choices that don’t require a lot of mental energy.

Kahneman’s work showed that heuristics lead to systematic errors (or biases), which act as the driving force for our decisions. He was able to apply this research to economic theory, leading to the formation of behavioral economics and a Nobel Prize for Kahneman in 2002.

In the years since, the study of heuristics has grown in popularity with economists and in cognitive psychology. Gerd Gigerenzer’s research, for example, challenges the idea that heuristics lead to errors or flawed thinking. He argues that heuristics are actually indicators that human beings are able to make decisions more effectively without following the traditional rules of logic. His research seems to indicate that heuristics lead us to the right answer most of the time.

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Types of heuristics

Heuristics are everywhere, whether we notice them or not. There are hundreds of heuristics at play in the human brain, and they interact with one another constantly. To understand how these heuristics can help you, start by learning some of the more common types of heuristics.

Recognition heuristic

The recognition heuristic uses what we already know (or recognize) as a criterion for decisions. The concept is simple: When faced with two choices, you’re more likely to choose the item you recognize versus the one you don’t.

This is the very base-level concept behind branding your business, and we see it in all well-known companies. Businesses develop a brand messaging strategy in the hopes that when you’re faced with buying their product or buying someone else's, you recognize their product, have a positive association with it, and choose that one. For example, if you’re going to grab a soda and there are two different cans in the fridge, one a Coca-Cola, and the other a soda you’ve never heard of, you are more likely to choose the Coca-Cola simply because you know the name.

Familiarity heuristic

The familiarity heuristic is a mental shortcut where individuals prefer options or information that is familiar to them. This heuristic is based on the notion that familiar items are seen as safer or superior. It differs from the recognition heuristic, which relies solely on whether an item is recognized. The familiarity heuristic involves a deeper sense of comfort and understanding, as opposed to just recognizing something.

An example of this heuristic is seen in investment decisions. Investors might favor well-known companies over lesser-known ones, influenced more by brand familiarity than by an objective assessment of the investment's potential. This tendency showcases how the familiarity heuristic can lead to suboptimal choices, as it prioritizes comfort and recognition over a thorough evaluation of all available options.

Availability heuristic

The availability heuristic is a cognitive bias where people judge the frequency or likelihood of events based on how easily similar instances come to mind. This mental shortcut depends on the most immediate examples that pop into one's mind when considering a topic or decision. The ease of recalling these instances often leads to a distorted perception of their actual frequency, as recent, dramatic, or emotionally charged memories tend to be more memorable.

A notable example of the availability heuristic is the public's reaction to shark attacks. When the media reports on shark attacks, these incidents become highly memorable due to their dramatic nature, leading people to overestimate the risk of such events. This heightened perception is despite statistical evidence showing the rarity of shark attacks. The result is an exaggerated fear and a skewed perception of the actual danger of swimming in the ocean.

Representativeness heuristic

The representativeness heuristic is when we try to assign an object to a specific category or idea based on past experiences. Oftentimes, this comes up when we meet people—our first impression. We expect certain things (such as clothing and credentials) to indicate that a person behaves or lives a certain way.

Without proper awareness, this heuristic can lead to discrimination in the workplace. For example, representativeness heuristics might lead us to believe that a job candidate from an Ivy League school is more qualified than one from a state university, even if their qualifications show us otherwise. This is because we expect Ivy League graduates to act a certain way, such as by being more hard-working or intelligent. Of course, in our rational brains, we know this isn’t the case. That’s why it’s important to be aware of this heuristic, so you can use logical thinking to combat potential biases.

Anchoring and adjustment heuristic

Used in finance for economic forecasting, anchoring and adjustment is when you start with an initial piece of information (the anchor) and continue adjusting until you reach an acceptable decision. The challenge is that sometimes the anchor ends up not being a good enough value to begin with. In other words, you choose the anchor based on unknown biases and then make further decisions based on this faulty assumption.

Anchoring and adjustment are often used in pricing, especially with SaaS companies. For example, a displayed, three-tiered pricing model shows you how much you get for each price point. The layout is designed to make it look like you won’t get much for the lower price, and you don’t necessarily need the highest price, so you choose the mid-level option (the original target). The anchors are the low price (suggesting there’s not much value here) and the high price (which shows that you’re getting a "discount" if you choose another option). Thanks to those two anchors, you feel like you’re getting a lot of value, no matter what you spend.

Affect heuristic

You know the advice; think with your heart. That’s the affect heuristic in action, where you make a decision based on what you’re feeling. Emotions are important ways to understand the world around us, but using them to make decisions is irrational and can impact your work.

For example, let’s say you’re about to ask your boss for a promotion. As a product marketer, you’ve made a huge impact on the company by helping to build a community of enthusiastic, loyal customers. But the day before you have your performance review, you find out that a small project you led for a new product feature failed. You decide to skip the conversation asking for a raise and instead double down on how you can improve.

In this example, you’re using the affect heuristic to base your entire performance on the failure of one small project—even though the rest of your performance (building that profitable community) is much more impactful than a new product feature. If you weighed the options rationally, you would see that asking for a raise is still a logical choice. But instead, the fear of asking for a raise after a failure felt like too big a trade-off.

Satisficing

Satisficing is when you accept an available option that’s satisfactory (i.e., just fine) instead of trying to find the best possible solution. In other words, you’re settling. This creates a “bounded rationality,” where you’re constrained by the choices that are good-enough, instead of pushing past the limits to discover more. This isn’t always negative—for lower-impact scenarios, it might not make sense to invest time and energy into finding the optimal choice. But there are also times when this heuristic kicks in and you end up settling for less than what’s possible.

For example, let’s say you’re a project manager planning the budget for the next fiscal year. Instead of looking at previous spend and revenue, you satisfice and base the budget off projections, assuming that will be good enough. But without factoring in historical data, your budget isn’t going to be as equipped to manage hiccups or unexpected changes. In this case, you can mitigate satisficing with a logically-based data review that, while longer, will produce a more accurate and thoughtful budget plan.

Trial and error heuristic

The trial and error heuristic is a problem-solving method where solutions are found through repeated experimentation. It's used when a clear path to the solution isn't known, relying on iterative learning from failures and adjustments.

For example, a chef might experiment with various ingredient combinations and techniques to perfect a new recipe. Each attempt informs the next, demonstrating how trial and error facilitates discovery in situations without formal guidelines.

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Pros and cons of heuristics

Heuristics are effective at helping you get more done quickly, but they also have downsides. Psychologists don’t necessarily agree on whether heuristics and biases are positive or negative. But the argument seems to boil down to these two pros and cons:

Heuristics pros:

Simple heuristics reduce cognitive load, allowing you to accomplish more in less time with fast and frugal decisions. For example, the satisficing heuristic helps you find a "good enough" choice. So if you’re making a complex decision between whether to cut costs or invest in employee well-being, you can use satisficing to find a solution that’s a compromise. The result might not be perfect, but it allows you to take action and get started—you can always adjust later on.

Heuristics cons:

Heuristics create biases. While these cognitive biases enable us to make rapid-fire decisions, they can also lead to rigid, unhelpful beliefs. For example, confirmation bias makes it more likely that you’ll seek out other opinions that agree with your own. This makes it harder to keep an open mind, hear from the other side, and ultimately change your mind—which doesn’t help you build the flexibility and adaptability so important for succeeding in the workplace.

Heuristics and psychology

Heuristics play a pivotal role in psychology, especially in understanding how people make decisions within their cognitive limitations. These mental shortcuts allow for quicker decisions, often necessary in a fast-paced world, but they can sometimes lead to errors in judgment.

The study of heuristics bridges various aspects of psychology, from cognitive processes to behavioral outcomes, and highlights the balance between efficient decision-making and the potential for bias.

Stereotypes and heuristic thinking

Stereotypes are a form of heuristic where individuals make assumptions based on group characteristics, a process analyzed in both English and American psychology.

While these generalizations can lead to rapid conclusions and rational decisions under certain circumstances, they can also oversimplify complex human behaviors and contribute to prejudiced attitudes. Understanding stereotypes as a heuristic offers insight into the cognitive limitations of the human mind and their impact on social perceptions and interactions.

How heuristics lead to bias

Because heuristics rely on shortcuts and stereotypes, they can often lead to bias. This is especially true in scenarios where cognitive limitations restrict the processing of all relevant information. So how do you combat bias? If you acknowledge your biases, you can usually undo them and maybe even use them to your advantage. There are ways you can hack heuristics, so that they work for you (not against you):

  • Be aware. Heuristics often operate like a knee-jerk reaction—they’re automatic. The more aware you are, the more you can identify and acknowledge the heuristic at play. From there, you can decide if it’s useful for the current situation, or if a logical decision-making process is best.

  • Flip the script. When you notice a negative bias, turn it around. For example, confirmation bias is when we look for things to be as we expect. So if we expect our boss to assign us more work than our colleagues, we might always experience our work tasks as unfair. Instead, turn this around by repeating that your boss has your team’s best interests at heart, and you know everyone is working hard. This will re-train your confirmation bias to look for all the ways that your boss is treating you just like everyone else.

  • Practice mindfulness. Mindfulness helps to build self-awareness, so you know when heuristics are impacting your decisions. For example, when we tap into the empathy gap heuristic, we’re unable to empathize with someone else or a specific situation. However, if we’re mindful, we can be aware of how we’re feeling before we engage. This helps us to see that the judgment stems from our own emotions and probably has nothing to do with the other person.

Read: The ladder of inference: How to avoid assumptions and make better decisions

Examples of heuristics in business

This is all well and good in theory, but how do heuristic decision-making and thought processes show up in the real world? One reason researchers have invested so much time and energy into learning about heuristics is so that they can use them, like in these scenarios:

How heuristics are used in marketing

Effective marketing does so much for a business—it attracts new customers, makes a brand a household name, and converts interest into sales, to name a few. One way marketing teams are able to accomplish all this is by applying heuristics.

Let’s use ambiguity aversion as an example. Ambiguity aversion means you're less likely to choose an item you don’t know. Marketing teams combat this by working to become familiar to their customers. This could include the social media team engaging in a more empathetic or conversational way, or employing technology like chat-bots to show that there’s always someone available to help. Making the business feel more approachable helps the customer feel like they know the brand personally—which lessens ambiguity aversion.

How heuristics are used in business strategy

Have you ever noticed how your CEO seems to know things before they happen? Or that the CFO listens more than they speak? These are indications that they understand people in a deeper way, and are able to engage with their employees and predict outcomes because of it. C-suite level executives are often experts in behavioral science, even if they didn’t study it. They tend to get what makes people tick, and know how to communicate based on these biases. In short, they use heuristics for higher-level decision-making processes and execution. 

This includes business strategy. For example, a startup CEO might be aware of their representativeness bias towards investors—they always look for the person in the room with the  fancy suit or car. But after years in the field, they know logically that this isn’t always true—plenty of their investors have shown up in shorts and sandals. Now, because they’re aware of their bias, they can build it into their investment strategy. Instead of only attending expensive, luxury events, they also attend conferences with like-minded individuals and network among peers. This approach can lead them to a greater variety of investors and more potential opportunities.

Heuristics vs algorithms

Heuristics and algorithms are both used by the brain to reduce the mental effort of decision-making, but they operate a bit differently. Algorithms act as guidelines for specific scenarios. They have a structured process designed to solve that specific problem. Heuristics, on the other hand, are general rules of thumb that help the brain process information and may or may not reach a solution.

For example, let's say you’re cooking a well-loved family recipe. You know the steps inside and out, and you no longer need to reference the instructions. If you’re following a recipe step-by-step, you’re using an algorithm. If, however, you decide on a whim to sub in some of your fresh garden vegetables because you think it will taste better, you’re using a heuristic.

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How to use heuristics to make better decisions

Heuristics can help us make decisions quickly and with less cognitive strain. While they can be efficient, they sometimes lead to errors in judgment. Understanding how to use heuristics effectively can improve decision-making, especially in complex or uncertain situations.

Take time to think

Rushing often leads to reliance on automatic heuristics, which might not always be suitable. To make better decisions, slow down your thinking process. Take a step back, breathe, and allow yourself a moment of distraction. This pause can provide a fresh perspective and help you notice details or angles you might have missed initially.

Clarify your objectives

When making a decision, it's important to understand the ultimate goal. Our automatic decision-making processes tend to favor immediate benefits, sometimes overlooking long-term impacts or the needs of others involved. Consider the broader implications of your decision. Who else is affected? Is there a common objective that benefits all parties? Such considerations can lead to more holistic and effective decisions.

Manage your emotional influences

Emotions significantly influence our decision-making, often without our awareness. Fast decisions are particularly prone to emotional biases. Acknowledge your feelings, but also separate them from the facts at hand. Are you making a decision based on solid information or emotional reactions? Distinguishing between the two can lead to more rational and balanced choices.

Beware of binary thinking

All-or-nothing thinking is a common heuristic trap, where we see decisions as black or white with no middle ground. However, real-life decisions often have multiple paths and possibilities. It's important to recognize this complexity. There might be compromises or alternative options that weren't initially considered. By acknowledging the spectrum of possibilities, you can make more nuanced and effective decisions.

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Heuristic FAQs

What is heuristic thinking?

Heuristic thinking refers to a method of problem-solving, learning, or discovery that employs a practical approach—often termed a "rule of thumb"—to make decisions quickly. Heuristic thinking is a type of cognition that humans use subconsciously to make decisions and judgments with limited time.

What is a heuristic evaluation?

A heuristic evaluation is a usability inspection method used in the fields of user interface (UI) and user experience (UX) design. It involves evaluators examining the interface and judging its compliance with recognized usability principles, known as heuristics. These heuristics serve as guidelines to identify usability problems in a design, making the evaluation process more systematic and comprehensive.

What are computer heuristics?

Computer heuristics are algorithms used to solve complex problems or make decisions where an exhaustive search is impractical. In fields like artificial intelligence and cybersecurity, these heuristic methods allow for efficient problem-solving and decision-making, often based on trial and error or rule-of-thumb strategies.

What are heuristics in psychology?

In psychology, heuristics are quick mental rules for making decisions. They are important in social psychology for understanding how we think and decide. Figures like Kahneman and Tversky, particularly in their work "Judgment Under Uncertainty: Heuristics and Biases," have influenced the study of heuristics in psychology.

Learn heuristics, de-mystify your brain

Your brain doesn’t actually work in mysterious ways. In reality, researchers know why we do a lot of the things we do. Heuristics help us to understand the choices we make that don’t make much sense. Once you understand heuristics, you can also learn to use them to your advantage—both in business, and in life. 

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In this ebook, learn how to equip employees to make better decisions—so your business can pivot, adapt, and tackle challenges more effectively than your competition.

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