Heuristics as adaptive decision strategies in management

TLDR

Heuristics are often viewed as sources of systematic error, yet in uncertain decision contexts they can be effective, as fast‑and‑frugal heuristics succeed in complex environments. This article proposes a conceptual framework positioning heuristics as adaptive decision strategies and connects it to managerial literature while outlining future research directions. The authors review five heuristic classes, analyze their shared building blocks, and illustrate how they are applied in managerial decision making. In uncertain management settings, simple heuristics can yield better and faster decisions than complex statistical procedures. © 2014 John Wiley & Sons, Ltd.

Abstract

In the management literature, heuristics are often conceived of as a source of systematic error, whereas logic and statistics are regarded as the sine qua non of good decision making. Yet, this view can be incorrect for decisions made under uncertainty, as opposed to risk. Research on fast and frugal heuristics shows that simple heuristics can be successful in complex, uncertain environments and also when and why this is the case. This article describes the conceptual framework of heuristics as adaptive decision strategies and connects it with the managerial literature. We review five classes of heuristics, analyze their common building blocks, and show how these are applied in managerial decision making. We conclude by highlighting some prominent opportunities for future research in the field. In the uncertain world of management, simple heuristics can lead to better and faster decisions than complex statistical procedures. Copyright © 2014 John Wiley & Sons, Ltd.