Ecological rationality: Fast-and-frugal heuristics for managerial decision making under uncertainty
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 c...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | text |
| Language: | English |
| Published: |
Institutional Knowledge at Singapore Management University
2019
|
| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/lkcsb_research/6401 https://ink.library.smu.edu.sg/context/lkcsb_research/article/7400/viewcontent/ecologicalrationality.pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Institution: | Singapore Management University |
| Language: | English |
| Summary: | 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 than half of the cues, Δ-inference can lead to more accurate selection decisions than logistic regression. After this existence proof, we examine in Study 2 the ecological conditions under which the heuristic predicts more accurately than logistic regression using 1,728 simulated task environments. Finally, in Study 3, we show in an experiment that participants adapted their strategies to the characteristics of a task, and increasingly so the greater their previous experience in selection decisions. The aim of this article is to propose ecological rationality as an alternative to current views about the nature of heuristics in managerial decisions. |
|---|