Fast And Frugal Decision Making

In a complex and uncertain world, humans and animals make decisions under the constraints of limited knowledge, resources, and time. Yet models of rational decision making in economics, cognitive science, biology, and other fields largely ignore these real constraints and instead assume agents with perfect information and unlimited time. About forty years ago, Herbert Simon challenged this view with his notion of "bounded rationality." Today, bounded rationality has become a fashionable term used for disparate views of reasoning. This book promotes bounded rationality as the key to understanding how real people make decisions. Using the concept of an "adaptive toolbox," a repertoire of fast and frugal rules for decision making under uncertainty, it attempts to impose more order and coherence on the idea of bounded rationality. The contributors view bounded rationality neither as optimization under constraints nor as the study of people's reasoning fallacies. The strategies in the adaptive toolbox dispense with optimization and, for the most part, with calculations of probabilities and utilities. The book extends the concept of bounded rationality from cognitive tools to emotions; it analyzes social norms, imitation, and other cultural tools as rational strategies; and it shows how smart heuristics can exploit the structure of environments.

A Fast and Frugal Finance: Bridging Contemporary Behavioral Finance and Ecological Rationality adds psychological reality to classical financial reasoning. It shows how financial professionals can reach better and quicker decisions using the 'fast and frugal' framework for decision-making, adding dramatically to time and outcome efficiency, while also retaining accuracy. The book provides the reader with an adaptive toolbox of heuristic tools and classification systems to aid real-world decisions. Throughout, financial applications are presented alongside real-world examples to help readers solve established problems in finance, including stock buying and selling decisions, even in situations of considerable uncertainty and risk. The book concludes by describing potential solutions to financial problems, including discussions on high frequency trading and machine learning algorithms. Demonstrates how well-constructed 'fast and frugal' models can outperform standard models in time and outcome efficiency Focuses on how financial decisions are made in reality rather than how they should be made Discusses how cognition and the decision-making context interact in producing 'fast and frugal' choices Explores the development of decision-making trees in finance to aid in decision-making

Simple Heuristics That Make Us Smart invites readers to embark on a new journey into a land of rationality that differs from the familiar territory of cognitive science and economics. Traditional views of rationality tend to see decision makers as possessing superhuman powers of reason, limitless knowledge, and all of eternity in which to ponder choices. To understand decisions in the real world, we need a different, more psychologically plausible notion of rationality, and this book provides it. It is about fast and frugal heuristics--simple rules for making decisions when time is pressing and deep thought an unaffordable luxury. These heuristics can enable both living organisms and artificial systems to make smart choices, classifications, and predictions by employing bounded rationality. But when and how can such fast and frugal heuristics work? Can judgments based simply on one good reason be as accurate as those based on many reasons? Could less knowledge even lead to systematically better predictions than more knowledge? Simple Heuristics explores these questions, developing computational models of heuristics and testing them through experiments and analyses. It shows how fast and frugal heuristics can produce adaptive decisions in situations as varied as choosing a mate, dividing resources among offspring, predicting high school drop out rates, and playing the stock market. As an interdisciplinary work that is both useful and engaging, this book will appeal to a wide audience. It is ideal for researchers in cognitive psychology, evolutionary psychology, and cognitive science, as well as in economics and artificial intelligence. It will also inspire anyone interested in simply making good decisions.

Decision Science and Technology is a compilation of chapters written in honor of a remarkable man, Ward Edwards. Among Ward's many contributions are two significant accomplishments, either of which would have been enough for a very distinguished career. First, Ward is the founder of behavioral decision theory. This interdisciplinary discipline addresses the question of how people actually confront decisions, as opposed to the question of how they should make decisions. Second, Ward laid the groundwork for sound normative systems by noticing which tasks humans can do well and which tasks computers should perform. This volume, organized into five parts, reflects those accomplishments and more. The book is divided into four sections: `Behavioral Decision Theory' examines theoretical descriptions and empirical findings about human decision making. `Decision Analysis' examines topics in decision analysis.`Decision in Society' explores issues in societal decision making. The final section, `Historical Notes', provides some historical perspectives on the development of the decision theory. Within these sections, major, multi-disciplinary scholars in decision theory have written chapters exploring some very bold themes in the field, as an examination of the book's contents will show. The main reason for the health of the Decision Analysis field is its close links between theory and applications that have characterized it over the years. In this volume, the chapters by Barron and Barrett; Fishburn; Fryback; Keeney; Moreno, Pericchi, and Kadane; Howard; Phillips; Slovic and Gregory; Winkler; and, above all, von Winterfeldt focus on those links. Decision science originally developed out of concern with real decision problems; and applied work, such as is represented in this volume, will help the field to remain strong.

The Blackwell Handbook of Judgment and Decision Making is a state-of-the art overview of current topics and research in the study of how people make evaluations, draw inferences, and make decisions under conditions of uncertainty and conflict. Contains contributions by experts from various disciplines that reflect current trends and controversies on judgment and decision making. Provides a glimpse at the many approaches that have been taken in the study of judgment and decision making and portrays the major findings in the field. Presents examinations of the broader roles of social, emotional, and cultural influences on decision making. Explores applications of judgment and decision making research to important problems in a variety of professional contexts, including finance, accounting, medicine, public policy, and the law.

How does a doctor or therapist bridge the gap between particulars and generalizations regarding patients and various phenomena or diseases? The authors of this volume illustrate the multiple ways practitioners in the fields of clinical psychology and medicine address the tension between the universal nature of scientific knowledge and its particular applications. They discuss the fact that some decisions, if made erroneously, have impacts that cannot be reversed. An error in the realms of medicine, ecology, peace, and war brings with it psychological strategies that differ from those a practitioner faces where errors are correctable. How does a doctor or therapist bridge the gap between particulars and generalizations regarding patients and various phenomena or diseases? The authors of this volume illustrate the multiple ways practitioners in the fields of clinical psychology and medicine address the tension between the universal nature of scientific knowledge and its particular applications. They discuss the fact that some decisions, if made erroneously, have impacts that cannot be reversed. An error in the realms of medicine, ecology, peace, and war brings with it psychological strategies that differ from those a practitioner faces where errors are correctable. The disciplines of psychology and medicine have two shared goals. The first is that both disciplines seek a basic understanding about how human beings exist in their ordinary biological and psychological worlds and the second is the attempt to describe and treat disruptions of each person's healthy state of being. Therefore, the four coeditors uncover areas of mutual interest between the two disciplines and the basis for the conflicts that have arisen in their fields.

The volume Rationality and Decision Making: From Normative Rules to Heuristics analyses rational and irrational decision making by individuals as well as by groups. The contributors adopt methodological, logical, linguistic, psychological, historical, and evolutionary perspectives.

Think less � and know more. A sportsman can catch a ball without calculating its speed or distance. A group of amateurs beat the experts at playing the stock market. A man falls for the right woman even though she�s �wrong� on paper. All these people succeeded by trusting their instincts � but how does it work? In Gut Feelings psychologist and behavioural expert Gerd Gigerenzer reveals the secrets of fast and effective decision-making. He explains that, in an uncertain world, sometimes we have to ignore too much information and rely on our brain�s �short cut�, or heuristic. By explaining how intuition works and analyzing the techniques that people use to make good decisions � whether it�s in personnel selection or heart surgery � Gigerenzer will show you why gut thinking can change your world.