IDEAS home Printed from https://ideas.repec.org/h/elg/eechap/15532_7.html
   My bibliography  Save this book chapter

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

In: Handbook of Behavioural Economics and Smart Decision-Making

Author

Listed:
  • Andreas Ortmann
  • Leonidas Spiliopoulos

Abstract

This Handbook is a unique and original contribution of over thirty chapters on behavioural economics, examining and addressing an important stream of research where the starting assumption is that decision-makers are for the most part relatively smart or rational. This particular approach is in contrast to a theme running through much contemporary work where individuals’ behaviour is deemed irrational, biased, and error-prone, often due to how people are hardwired. In the smart people approach, where errors or biases occur and when social dilemmas arise, more often than not, improving the decision-making environment can repair these problems without hijacking or manipulating the preferences of decision-makers. This book covers a wide-range of themes from micro to macro, including various sub-disciplines within economics such as economic psychology, heuristics, fast and slow-thinking, neuroeconomics, experiments, the capabilities approach, institutional economics, methodology, nudging, ethics, and public policy.

Suggested Citation

  • Andreas Ortmann & Leonidas Spiliopoulos, 2017. "The beauty of simplicity? (Simple) heuristics and the opportunities yet to be realized," Chapters,in: Handbook of Behavioural Economics and Smart Decision-Making, chapter 7, pages 119-136 Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:15532_7
    as

    Download full text from publisher

    File URL: https://www.elgaronline.com/view/9781782549574.00014.xml
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Åstebro & Samir Elhedhli, 2006. "The Effectiveness of Simple Decision Heuristics: Forecasting Commercial Success for Early-Stage Ventures," Management Science, INFORMS, vol. 52(3), pages 395-409, March.
    2. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
    3. Spiliopoulos, Leonidas, 2012. "Pattern recognition and subjective belief learning in a repeated constant-sum game," Games and Economic Behavior, Elsevier, vol. 75(2), pages 921-935.
    4. anonymous, 1967. "Management Science, Series B, Referees," Management Science, INFORMS, vol. 13(12), pages 419-419, August.
    5. Charness, Gary & Karni, Edi & Levin, Dan, 2010. "On the conjunction fallacy in probability judgment: New experimental evidence regarding Linda," Games and Economic Behavior, Elsevier, vol. 68(2), pages 551-556, March.
    6. W. Brian Arthur, 1994. "Inductive Reasoning, Bounded Rationality and the Bar Problem," Working Papers 94-03-014, Santa Fe Institute.
    7. Wilcox, Nathaniel T., 2011. "'Stochastically more risk averse:' A contextual theory of stochastic discrete choice under risk," Journal of Econometrics, Elsevier, vol. 162(1), pages 89-104, May.
    8. Harrison, Glenn W, 1989. "Theory and Misbehavior of First-Price Auctions," American Economic Review, American Economic Association, vol. 79(4), pages 749-762, September.
    9. Spiliopoulos, Leonidas, 2013. "Beyond fictitious play beliefs: Incorporating pattern recognition and similarity matching," Games and Economic Behavior, Elsevier, vol. 81(C), pages 69-85.
    10. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    11. Gabriel D. Carroll & James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2009. "Optimal Defaults and Active Decisions," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1639-1674.
    12. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345.
    13. Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
    14. Mengel, Friederike & Sciubba, Emanuela, 2014. "Extrapolation and structural similarity in games," Economics Letters, Elsevier, vol. 125(3), pages 381-385.
    15. Daniel G. Goldstein & Gerd Gigerenzer, 2011. "The beauty of simple models: Themes in recognition heuristic research," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 6(5), pages 392-395, July.
    16. Konstantinos Katsikopoulos & Gerd Gigerenzer, 2008. "One-reason decision-making: Modeling violations of expected utility theory," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 35-56, August.
    17. Konstantinos V. Katsikopoulos, 2014. "Bounded rationality: the two cultures," Journal of Economic Methodology, Taylor & Francis Journals, vol. 21(4), pages 361-374, December.
    18. Arthur, W Brian, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, American Economic Association, vol. 84(2), pages 406-411, May.
    19. Daniel Friedman & Kai Pommerenke & Rajan Lukose & Garrett Milam & Bernardo Huberman, 2007. "Searching for the sunk cost fallacy," Experimental Economics, Springer;Economic Science Association, vol. 10(1), pages 79-104, March.
    20. Peter Duersch & Jörg Oechssler & Burkhard Schipper, 2014. "When is tit-for-tat unbeatable?," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(1), pages 25-36, February.
    21. Till Grüne-Yanoff & Caterina Marchionni & Ivan Moscati, 2014. "Introduction: methodologies of bounded rationality," Journal of Economic Methodology, Taylor & Francis Journals, vol. 21(4), pages 325-342, December.
    22. Leland, Jonathan W, 1994. "Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies," Journal of Risk and Uncertainty, Springer, vol. 9(2), pages 151-172, October.
    23. Stahl, Dale O., 1996. "Boundedly Rational Rule Learning in a Guessing Game," Games and Economic Behavior, Elsevier, vol. 16(2), pages 303-330, October.
    24. Nathan Berg & Gerd Gigerenzer, 2010. "As-if behavioral economics: neoclassical economics in disguise?," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(1), pages 133-166.
    25. Esther-Mirjam Sent, 2004. "Behavioral Economics: How Psychology Made Its (Limited) Way Back Into Economics," History of Political Economy, Duke University Press, vol. 36(4), pages 735-760, Winter.
    26. Smith, Vernon L, 1991. "Rational Choice: The Contrast between Economics and Psychology," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 877-897, August.
    27. Rubinstein, Ariel, 1986. "Finite automata play the repeated prisoner's dilemma," Journal of Economic Theory, Elsevier, vol. 39(1), pages 83-96, June.
    28. Stahl, Dale O., 2000. "Rule Learning in Symmetric Normal-Form Games: Theory and Evidence," Games and Economic Behavior, Elsevier, vol. 32(1), pages 105-138, July.
    29. Robin M. Hogarth & Natalia Karelaia, 2005. "Simple Models for Multiattribute Choice with Many Alternatives: When It Does and Does Not Pay to Face Trade-offs with Binary Attributes," Management Science, INFORMS, vol. 51(12), pages 1860-1872, December.
    30. R. Preston Mcafee & Hugo M. Mialon & Sue H. Mialon, 2010. "Do Sunk Costs Matter?," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 323-336, April.
    31. Gode, Dhananjay K & Sunder, Shyam, 1993. "Allocative Efficiency of Markets with Zero-Intelligence Traders: Market as a Partial Substitute for Individual Rationality," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 119-137, February.
    32. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    33. Gerd Gigerenzer & Reinhard Selten (ed.), 2002. "Bounded Rationality: The Adaptive Toolbox," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262571641.
    34. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
    35. Natalia Vuori & Timo Vuori, 2014. "Comment on “Heuristics in the strategy context” by Bingham and Eisenhardt (2011)," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1689-1697, November.
    36. Cheung, Yin-Wong & Friedman, Daniel, 1997. "Individual Learning in Normal Form Games: Some Laboratory Results," Games and Economic Behavior, Elsevier, vol. 19(1), pages 46-76, April.
    37. Loock, Moritz & Hinnen, Gieri, 2015. "Heuristics in organizations: A review and a research agenda," Journal of Business Research, Elsevier, vol. 68(9), pages 2027-2036.
    38. anonymous, 1967. "Private demand weakens," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 2-4.
    39. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    40. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    41. Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
    42. Dale O. Stahl, 1999. "Evidence based rules and learning in symmetric normal-form games," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(1), pages 111-130.
    43. Elizabeth Maitland & André Sammartino, 2015. "Decision making and uncertainty: The role of heuristics and experience in assessing a politically hazardous environment," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1554-1578, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economics and Finance;

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:eechap:15532_7. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Darrel McCalla). General contact details of provider: http://www.e-elgar.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.