The beauty of simplicity? (Simple) heuristics and the opportunities yet to be realized

Andreas Ortmann and Leonidas Spiliopoulos

No 2015-25, Discussion Papers from School of Economics, The University of New South Wales

Abstract: Heuristics are all around us, both in the real world and the literature. There are many of them and there are many—too many—definitions of them. In this chapter we focus on the history of fast and frugal heuristics, as sketched out comprehensively in Gigerenzer, Todd, & the ABC Research Group (1999) and scores of follow-up books. Specifically, we contextualize the emergence of the “Ecological-Rationality” program as an explicit counterpoint to the “Heuristics-and-Biases” program initiated by Kahneman and Tversky that informed and inspired scores of early behavioural economists. Simple heuristics are here understood to be fast and frugal rules of thumb because they ignore information that is available. Also, they ought to reflect cognitive processes (and hence be able to predict) rather than be as-if modelling exercises that explain ex post. We first review in more detail how this battle of programs unfolded and then a) lay out what we consider the considerable accomplishments of the ER program, b) point out some overlooked connections between the ER program and economics, and c) enumerate what we consider to be open questions and challenges.

Keywords: heuristics; simple heuristics; simplicity; model selection; beauty (search for similar items in EconPapers)
JEL-codes: B20 B41 C02 C18 D01 D03 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-10
New Economics Papers: this item is included in nep-cbe, nep-evo and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Chapter: The beauty of simplicity? (Simple) heuristics and the opportunities yet to be realized (2017)
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