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“Take-the-Bestâ€\x9D and Other Simple Strategies: Why and When they Work “Wellâ€\x9D with Binary Cues

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Author Info

  • Robin Hogarth

    ()

  • Natalia Karelaia

    ()

Abstract

The effectiveness of decision rules depends on characteristics of both rules and environments. A theoretical analysis of environments specifies the relative predictive accuracies of the “take-the-bestâ€\x9D heuristic (TTB) and other simple strategies for choices between two outcomes based on binary cues. We identify three factors: how cues are weighted; characteristics of choice sets; and error. In the absence of error and for cases involving from three to five binary cues, TTB is effective across many environments. However, hybrids of equal weights (EW) and TTB models are more effective as environments become more compensatory. As error in the environment increases, the predictive ability of all models is systematically degraded. Indeed, using the datasets of Gigerenzer et al. (1999, Simple Heuristics That Make Us Smart, New York: Oxford University Press), TTB and similar models do not predict much better than a naïve model that exploits dominance. Finally, we emphasize that the results reported here are conditional on binary cues. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11238-006-9000-8
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Bibliographic Info

Article provided by Springer in its journal Theory and Decision.

Volume (Year): 61 (2006)
Issue (Month): 3 (November)
Pages: 205-249

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Handle: RePEc:kap:theord:v:61:y:2006:i:3:p:205-249

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Web page: http://www.springerlink.com/link.asp?id=100341

Related research

Keywords: decision making; bounded rationality; lexicographic rules; take-the-best; equal weighting;

References

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  1. Robin Hogarth & Natalia Karelaia, 2004. "Ignoring information in binary choice with continuous variables: When is less 'more'?," Economics Working Papers 742, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
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Cited by:
  1. Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010. "Does consistency predict accuracy of beliefs?: Economists surveyed about PSA," MPRA Paper 26590, University Library of Munich, Germany.
  2. Torsten Reimer & Ulrich Hoffrage, 2006. "The Ecological Rationality of Simple Group Heuristics: Effects of Group Member Strategies on Decision Accuracy," Theory and Decision, Springer, vol. 60(4), pages 403-438, 06.

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