Some Common Heuristics
Catching a Baseball with the Gaze
when baseball players lock their eyes on the ball and then adjust their position accordingly
Confirmation Bias
the human tendency to pay attention only to information that agrees with one’s preconceptions
Losses and Shrinking Packages
people see the world in terms of gains and losses relative to the status quo situations that they are used to
Hiding the Alarm Clock
If you understand that your future self is not going to want to cooperate, you can take steps to prevent that future self from flaking out
The Dictator Game:
The Rules
In the game, two people interact anonymously. One of them is randomly designated as the “dictator.” It is his job to split an amount of money that is put up for that purpose by the researcher running the game
Riding a Bicycle with the Steering Heuristic
steer in the direction you are falling
Self-Serving Bias
the tendency to attribute their successes to personal effort or personal character traits while at the same time attributing any failures to factors that were out of their control
Framing Effects and Advertising
people evaluate situations in terms of gains and losses, their decision making can be very sensitive to the mental frame of mind
Automatic Payroll Deductions
Precommitment strategies have also been used to help future selves save more
The Dictator Game:
How Players Behave
Experimenters have found that only one-third of dictators keep all of the money for themselves. The other two-thirds show substantial generosity.
Guesstimating Ranks with the Recognition Heuristic
by employing the recognition heuristic, which says to assume that if one option is more easily recognized, it is probably more important or more highly ranked
Overconfidence Effect
the tendency to be overly confident about how likely their judgments and opinions are to be correct
Anchoring and Credit Card Bills
irrelevant information can anchor subsequent valuations is not fully understood and credit card companies have figured this out (they use anchoring to increase their profits by showing very small minimum-payment amounts on borrowers’ monthly credit card statements).
Salary Smoothing
School teachers and college professors often have the choice of having their annual salaries paid out over 9 larger monthly installments (to match the length of the school year) or 12 smaller monthly installments (to match the length of the calendar year)
The Dictator Game:
Implications for Fairness
First, the majority of people appear to be genuinely concerned about being fair to other people.
Second, generosity varies quite widely.
Interpreting Depth with the Shadow Heuristic
The brain processes light with a heuristic that assumes that light always comes from above
Hindsight Bias
when they retroactively believe that they were able to predict past events
Mental Accounting and Overpriced Warranties
people arbitrarily put certain options into totally separate “mental accounts” that they dealt with without any thought to options outside of those accounts (as an example of where this suboptimal tendency leads, consider the extended warranties offered by big electronic stores whenever customers purchase expensive products like plasma TVs)
Early Withdrawal Penalties
Sometimes, one cognitive bias can be used to offset another. Retirement accounts that have early-withdrawal penalties are a good example
The Ultimatum Game:
The Rules
At the start of the experiment, one of the players is randomly assigned to be “the proposer” while the other player is randomly assigned to be “the responder.” The game begins with the proposer proposing a split. As in the dictator game, the proposed split can range anywhere from suggesting that all the money go to the proposer to suggesting that all the money go to the responder. The responder examines the proposed split and decides whether to accept it or reject it. If she accepts it, the split is made and both players are immediately paid their shares by the researcher. But if the responder rejects the proposed split, neither player gets anything.
The Implications of Hardwired Heuristics
It may be very difficult for people to alter detrimental behaviors or routines even after you point out what they’re doing wrong.
People may be easy prey for those who understand their hardwired tendencies.
If you want people to make a positive behavioral change, it might be helpful to see if you can put them in a situation where a heuristic will kick in and subconsciously lead them toward the desired outcome.
Availability Heuristic
causes people to base their estimates about the likelihood of an event not on objective facts but on whether or not similar events come to mind quickly
As an example, you are five times more likely to die of stomach cancer than be murdered, but most people rate the likelihood of being murdered as much higher. They do this because they have many vivid memories of both real and fictional murders but almost no recollections whatsoever of anyone dying of stomach cancer.
The Endowment Effect and Market Transactions
the tendency that people have to put a higher valuation on anything that they currently possess (are endowed with) than on identical items that they do not own but might purchase
For instance, if we show a person a new coffee mug and ask him what the maximum amount is that he would pay to buy it, he might say $10. But if we then give the mug to him so that he now owns it, and we then ask how much we would have to pay him to buy it back, he will very likely report. a much higher value—say, $15.
Weight-Loss Competitions
the prospect of losing the competition can be a great motivator because loss aversion applies just as much to future selves as to present selves
The Ultimatum Game:
How Players Behave
The first behavior that stands out is the splits proposed by proposers in the ultimatum game are much more equal on average than the splits imposed by dictators in the dictator game.
The second behavior that stands out is the decisiveness, and emotional intensity with which responders reject offers that they consider unfair.