Todd,P.M.

Modern technology is succeeding in delivering more information to people at ever faster rates. Under traditional views of rational decision making where individuals should evaluate and combine all available evidence, more information will yield better decisions. But our minds are designed to work in environments where information is often costly and difficult to obtain, leading us to use simple fast and frugal heuristics when making many decisions. These heuristics typically ignore most of the available information and rely on only a few important cues. Yet they make choices that are accurate in their appropriate application domains, achieving ecological rationality through their fit to particular information structures. This paper presents four classes of simple heuristics that use limited information-recognition-based heuristics, one-reason decision mechanisms, multiple-cue elimination strategies, and quick sequential search mechanisms-applied to environments from stock market investment to judging intentions of other organisms to choosing a mate. The findings that ecological rationality can be achieved with limited information are also used to indicate how our mind's design, relying on decision mechanisms tuned to specific environments, should be taken into account in our technology's design, creating environments that can enable better decisions. ?? 2005 Elsevier B.V. All rights reserved.

Todd, P. M. (2007). How much information do we need? European Journal of Operational Research, 177, 1317-1332. (Full text)

Publication year	2007
Document type:	Article
Publication status:	Published
External URL:	http://dx.doi.org/10.1016/j.ejor.2005.04.005 View
Categories:	Ecological RationalityInvestmentEnvironment Structure
Keywords:	ecological rationalityfast and frugal decision making\renvironment structheuristicslimited information