The Priority Heuristic: Making Choices Without Trade-Offs

By E. Brandstätter, Gerd Gigerenzer, Ralph Hertwig. Psychology Review, 2006

711 citations recorded by the source corpus.

Bernoulli's framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, we generalize the framework of fast and frugal heuristics from inferences to preferences. The priority heuristic predicts (i) Allais' paradox, (ii) risk aversion for gains if probabilities are high, (iii) risk seeking for gains if probabilities are low (lottery tickets), (iv) risk aversion for losses if probabilities are low (buying insurance), (v) risk seeking for losses if probabilities are high, (vi) certainty effect, (vii) possibility effect, and (viii) intransitivities. We test how accurately the heuristic predicts people's choices, compared to previously proposed heuristics and three modifications of expected utility theory: security-potential/aspiration theory, transfer-of-attention-exchange model, and cumulative prospect theory.

Subfields: Economics and Econometrics, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/220d1c0ac739f93ea4f5a37775a62700355a6a20

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Citations in the corpus

An eye‐tracking study on information processing in risky decisions: Evidence for compensatory strategies based on automatic processes (2011, methodology): “The initially very promising results for PH (Brandstätter et al., 2006) seem not to hold in critical tests that include differentiating items.”
Trial-by-trial data analysis using computational models (2011, methodology): “For choice behavior, an approach that is sometimes used and that may initially seem more intuitive is to optimize parameters (and compare model ﬁt) on the basis of the number of choices correctly predicted (Brandstatter et al., 2006).”
The Description-Experience Gap in Risky Choice: The Role of Sample Size and Experienced Probabilities (2008, methodology): “In light of a recent extensive analysis of decisions from description this performance is remarkable: in that investigation the maximax heuristic performed dismally (see Brandstätter et al., 2006; Figure 7).”
Hierarchical Bayesian parameter estimation for cumulative prospect theory (2011, methodology): “In a different study, Brandstätter et al. (2006) used the same set of parameters when they compared CPT to a simple model of decision making, the (parameter free) ‘‘priority heuristic’’.”
Fast and frugal heuristics: Tools of social rationality. (2009, neutral): “This explains why similarly constructed heuristics such as the take-the-best heuristic and the priority heuristic can account for dissimilar tasks (here inferences and preferences; Brandstätter et al., 2006; Gigerenzer & Goldstein, 1996).”
Do People Make Decisions Under Risk Based on Ignorance? An Empirical Test of the Priority Heuristic Against Cumulative Prospect Theory (2008, methodology): “The selection was validated by analyzing choice predictions using CPT with two different sets of parameters measured by Erev et al. (2002; as cited in Brandstätter et al., 2006) and Tversky and Kahneman (1992).”
As-If Behavioral Economics: Neoclassical Economics in Disguise? (2010, neutral): “Brandstätter et al. (2006) showed that cumulative prospect theory (which has five adjustable parameters) over-fits in each of four data sets.”
Expected utility theory and prospect theory: one wedding and a decent funeral (2009, background): “24See Starmer (2000) and Brandstatter et al. (2006) for reviews of many of these models.”
Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation (2009, methodology): “Some evidence also supports the priority heuristic process model as latencies to choose between two options have been greater for choices that require three considerations compared to one consideration ( Brandstatter et al., 2006 ).”
Testing for intransitivity of preferences predicted by a lexicographic semi-order (2007, methodology): “According to the priority heuristic (PH) model of Brandstätter et al. (2006), people choose between twobranch gambles by first considering the lowest consequences.”