What Is A Heuristic In Behavioral Economics?

A heuristic is a simplified mental shortcut that individuals use to quickly make judgments and decisions. Heuristics are often used when faced with complex or uncertain situations, and they can help individuals to make decisions more efficiently by allowing them to rely on past experiences or rules of thumb. However, heuristics can also lead to biases and errors in decision-making, as they are based on incomplete or imperfect information and do not always provide the most accurate or optimal solution to a problem. Examples of common heuristics include the availability heuristic, in which individuals base their judgments on information that is readily available to them, and the representativeness heuristic, in which individuals assume that events or objects that are similar in some ways are also similar in other ways.

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