The Similarity Heuristic

Daniel Read () and Yael Grushka-Cockayne ()
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Daniel Read: Durham Business School
Yael Grushka-Cockayne: London Business School

No 2007_09, Department of Economics Working Papers from Durham University, Department of Economics

Abstract: Decision makers are often called on to make snap judgments using fast-and- frugal decision rules called cognitive heuristics. Although early research into cognitive heuristics emphasized their limitations, more recent research has focused on their high level of accuracy. In this paper we investigate the performance a subset of the representativeness heuristic which we call the similarity heuristic. Decision makers who use it judge the likelihood that an instance is a member of one category rather than another by the degree to which it is similar to others in that category. We provide a mathematical model of the heuristic and test it experimentally in a trinomial environment. The similarity heuristic turns out to be a reliable and accurate choice rule and both choice and response time data suggest it is also how choices are made.

Keywords: heuristics and biases; fast-and-frugal heuristics; similarity; representative design; base-rate neglect; Bayesian inference (search for similar items in EconPapers)
Date: 2007-03-20
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