Fast And Frugal ⌛
Discover the power of simplicity in decision-making.
What is Fast and Frugal? 💭
At Fast and Frugal, we explore how straightforward, efficient strategies can lead to effective decisions in a complex world.
Whether you're a student, professional, or just curious about better decision-making, our resources will help you understand and apply fast and frugal heuristics in everyday life
What Are Fast and Frugal Heuristics? ✏️
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Understanding the Basic
Fast and frugal heuristics are simple, efficient rules that guide decision-making. They are designed to work quickly with minimal information, making them perfect for situations where time and resources are limited. These heuristics are part of the broader concept of bounded rationality, which acknowledges the limitations of human decision-making.
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Key Characteristics
Simplicity: Easy-to-apply rules.
Speed: Quick decision-making processes.
Effectiveness: Surprisingly accurate outcomes.
Limited Information: Utilizes readily available data.
Speed: Quick decision-making processes.
Effectiveness: Surprisingly accurate outcomes.
Limited Information: Utilizes readily available data.
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Examples of Fast and Frugal Heuristic
Recognition Heuristic: Choose the option you recognize.
Take-the-Best Heuristic: Focus on the most important cue and ignore the rest.
Default Heuristic: Stick with the default option unless there's a strong reason to change
Take-the-Best Heuristic: Focus on the most important cue and ignore the rest.
Default Heuristic: Stick with the default option unless there's a strong reason to change
Fast and Frugal Examples 📚
Recognition Heuristic
Scenario: Choosing a Product
You are in a grocery store trying to choose between two brands of a product, and you recognize one brand but not the other. Using the recognition heuristic, you choose the brand you recognize.
Why it works: The recognized brand is more likely to be familiar because it has a stronger presence or reputation, suggesting it might be a better choice.
You are in a grocery store trying to choose between two brands of a product, and you recognize one brand but not the other. Using the recognition heuristic, you choose the brand you recognize.
Why it works: The recognized brand is more likely to be familiar because it has a stronger presence or reputation, suggesting it might be a better choice.
Recognition Heuristic
Scenario: Choosing a Product
You are in a grocery store trying to choose between two brands of a product, and you recognize one brand but not the other. Using the recognition heuristic, you choose the brand you recognize.
Why it works: The recognized brand is more likely to be familiar because it has a stronger presence or reputation, suggesting it might be a better choice.
You are in a grocery store trying to choose between two brands of a product, and you recognize one brand but not the other. Using the recognition heuristic, you choose the brand you recognize.
Why it works: The recognized brand is more likely to be familiar because it has a stronger presence or reputation, suggesting it might be a better choice.
Default Heuristic
Scenario: Opting into a Retirement Plan
An employee is automatically enrolled in a company's retirement plan unless they choose to opt out. They decide to stick with the default option.
Why it works: Defaults are often chosen for their beneficial attributes, and sticking with them saves the effort and cognitive load of making a complex decision.
An employee is automatically enrolled in a company's retirement plan unless they choose to opt out. They decide to stick with the default option.
Why it works: Defaults are often chosen for their beneficial attributes, and sticking with them saves the effort and cognitive load of making a complex decision.
Gaze Heuristic
Scenario: Catching a Ball
An outfielder in baseball catches a fly ball by keeping their gaze fixed on the ball and adjusting their running speed so the angle of their gaze remains constant.
Why it works: This heuristic allows the player to intercept the ball using a simple rule that effectively guides their movement.
An outfielder in baseball catches a fly ball by keeping their gaze fixed on the ball and adjusting their running speed so the angle of their gaze remains constant.
Why it works: This heuristic allows the player to intercept the ball using a simple rule that effectively guides their movement.
Tit-for-Tat Heuristic
Scenario: Negotiating a Deal
In a negotiation, one party responds to another party's actions with similar actions. If the other party cooperates, they cooperate. If the other party competes, they compete.
Why it works: This heuristic promotes fairness and encourages cooperation, as both parties know that their actions will be reciprocated.
In a negotiation, one party responds to another party's actions with similar actions. If the other party cooperates, they cooperate. If the other party competes, they compete.
Why it works: This heuristic promotes fairness and encourages cooperation, as both parties know that their actions will be reciprocated.
Imitate the Majority Heuristic
Scenario: Voting in an Election
A voter in an election decides to vote for the candidate they believe the majority of their social circle is supporting.
Why it works: Following the majority can be a safe bet, as it suggests that there is a general consensus on the best choice.
A voter in an election decides to vote for the candidate they believe the majority of their social circle is supporting.
Why it works: Following the majority can be a safe bet, as it suggests that there is a general consensus on the best choice.
Social Proof Heuristic
Scenario: Choosing a Restaurant
You are in a new city and trying to choose a restaurant. You see one restaurant that is crowded and another that is nearly empty. You choose the crowded one.
Why it works: The popularity of the crowded restaurant suggests it is a better choice, as many people are dining there.
You are in a new city and trying to choose a restaurant. You see one restaurant that is crowded and another that is nearly empty. You choose the crowded one.
Why it works: The popularity of the crowded restaurant suggests it is a better choice, as many people are dining there.
1/N Heuristic
Scenario: Investment Portfolio
An investor decides to allocate their investment equally across N different assets rather than trying to optimize the allocation.
Why it works: This heuristic simplifies the decision-making process and often leads to a diversified and relatively low-risk portfolio.
An investor decides to allocate their investment equally across N different assets rather than trying to optimize the allocation.
Why it works: This heuristic simplifies the decision-making process and often leads to a diversified and relatively low-risk portfolio.
Fluency Heuristic
Scenario: Choosing a Stock
An investor is considering multiple stocks and chooses the one whose name they can pronounce more easily.
Why it works: Stocks with easily pronounceable names may be perceived as less risky and more familiar, leading to a preference based on processing fluency.
An investor is considering multiple stocks and chooses the one whose name they can pronounce more easily.
Why it works: Stocks with easily pronounceable names may be perceived as less risky and more familiar, leading to a preference based on processing fluency.