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16 How people make decisions involving multiple objectives
strategy that they think is most appropriate for a particular decision.
Simon 1 used the term bounded rationality to refer to the fact that the
limitations of the human mind mean that people have to use ‘approximate
methods’ to deal with most decision problems and, as a result,
they seek to identify satisfactory, rather than optimal, courses of action.
These approximate methods, or rules of thumb, are often referred to
as ‘heuristics’. Simon, and later Gigerenzer et al., 2 have also emphasized
that people’s heuristics are often well adapted to the structure
of their knowledge about the environment. For example, suppose a
decision maker knows that the best guide to the quality of a university
is its research income. Suppose also that this is a far better guide than
any other attribute of the university such as quality of sports facilities
or teaching quality (or any combination of these other attributes). In
this environment a prospective student who chooses a university simply
on the basis of its research income is likely to choose well – the
simple heuristic would be well matched to the decision-making environment.
Quick ways of making decisions like this which people use,
especially when time is limited, have been referred to as ‘fast and frugal
heuristics’ by Gigerenzer and his colleagues. We will first look at
the heuristics which can be found in most decision makers’ ‘toolboxes’
and then we will consider how people choose heuristics for particular
decision problems.
Heuristics used for decisions involving
multiple objectives
When a decision maker has multiple objectives the heuristic used will
either be compensatory or non-compensatory. In a compensatory strategy
an option’s poor performance on one attribute is compensated by
good performance on others. For example, a computer’s reliability and
fast processor speed may be judged to compensate for its unattractive
price. This would not be the case in a non-compensatory strategy. Compensatory
strategies involve more cognitive effort because the decision
maker has the difficult task of making trade-offs between improved
performance on some attributes and reduced performance on others.
The recognition heuristic
The recognition heuristic 2 is used where people have to choose between
two options. If one is recognized and the other is not, the recognized