Psychology Commons^™

Ecological Rationality: Fast-And-Frugal Heuristics For Managerial Decision Making Under Uncertainty, Shenghua Luan, Jochen Reb, Gerd Gigerenzer

Research Collection Lee Kong Chian School Of Business

Heuristics are often viewed as inferior to “rational” strategies that exhaustively search and process information. Introducing the theoretical perspective of ecological rationality, we challenge this view and argue that under conditions of uncertainty common to managerial decision making, managers can actually make better decisions using fast-and-frugal heuristics. Within the context of personnel selection, we show that a heuristic called Δ-inference can more accurately predict which of two job applicants would perform better in the future than logistic regression, a prototypical rational strategy. Using data from 236 applicants at an airline company, we demonstrate in Study 1 that despite searching less …