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Heuristics proves best decision model

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in Centerpiece,Leaders & Managers,Leadership Skills

When Captain Chesley Sullenberger made the decision to land his doomed plane in the Hudson River, he didn’t have time to calculate his odds of success.

He made his decision based on “heuristics,” a rule that directs focus to areas that matter while blocking out nonessential information.

The result: faster decisions with less information.

Could it work in organizations?

Yes, says Gerd Gigerenzer of the Max Planck Institute for Human Development in Berlin, though we often don’t put heuristics to use.

“For some reason, we don’t think about simplicity; we always want something complex, maybe to impress someone else,” he says.

Gigerenzer cites a study he did for a Michigan hospital struggling with overcrowding in its coronary care unit. Close to 90% of patients passing through the emergency room were sent there.

The reason: defensive decision-making. If a patient has chest pains, doctors have the choice of putting her on a regular bed or in the coronary care unit. If the patient is in a regular bed and dies of a heart attack, though, the doctor could be sued. So, ultimately, doctors make decisions to lower their potential risk.

When the hospital called in re­­searchers to solve the overcrowding problem, researchers took two different approaches. One was a complex solution, using a prediction model that used multiple variables and logistic regression.

The other approach, called the “fast and frugal tree,” was a simple heuristic model. It required decision-makers to answer three questions, then choose where to place the patient.

Which one worked? When re­­searchers compared data, they saw that traditional, defensive decision-making yielded the greatest number of errors. The statistical model showed mixed results. Meanwhile, the simple or heuristic model yielded a positive outcome and offered decision-makers more leeway to adapt to new information.

Sometimes, less is more.

— Adapted from “For faster and better decisions, a biased and less-informed mind,” Knowledge@SMU.

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