Bounded rationality
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Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than o
Oudewater waitress 2010 07 18
Heuristic (psychology)
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Heuristics is the process by which humans use mental shortcuts to arrive at decisions. Heuristics are simple strategies that humans, animals, organizations, and even machines use to quickly form judgm
Bounded rationality
…the possibility of having a vector or multi-valued utility function Simon suggests that economic agents use heuristics to make decisions rather than a strict rigid rule of optimization. They do this because of the complexity of the situation. An example of behaviour…
Figure 1: Screening for HIV in the general public follows the logic of a fast-and-frugal tree. If the first enzyme immunoassay (ELISA) is negative, the diagnosis is "no HIV." If not, a second ELISA is performed; if it is negative, the diagnosis is "no HIV." Otherwise, a Western blot test is performed, which determines the final classification.
The amount of money people will pay in an auction for a bottle of wine can be influenced by considering an arbitrary two-digit number.
A visual example of attribute substitution. This illusion works because the 2D size of parts of the scene is judged on the basis of 3D (perspective) size, which is rapidly calculated by the visual system.