Theory and Decision

, Volume 61, Issue 3, pp 205–249 | Cite as

“Take-the-Best” and Other Simple Strategies: Why and When they Work “Well” with Binary Cues

Article

Abstract

The effectiveness of decision rules depends on characteristics of both rules and environments. A theoretical analysis of environments specifies the relative predictive accuracies of the “take-the-best” heuristic (TTB) and other simple strategies for choices between two outcomes based on binary cues. We identify three factors: how cues are weighted; characteristics of choice sets; and error. In the absence of error and for cases involving from three to five binary cues, TTB is effective across many environments. However, hybrids of equal weights (EW) and TTB models are more effective as environments become more compensatory. As error in the environment increases, the predictive ability of all models is systematically degraded. Indeed, using the datasets of Gigerenzer et al. (1999, Simple Heuristics That Make Us Smart, New York: Oxford University Press), TTB and similar models do not predict much better than a naïve model that exploits dominance. Finally, we emphasize that the results reported here are conditional on binary cues.

Keywords

decision making bounded rationality lexicographic rules take-the-best equal weighting 

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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Department of Economics and BusinessUniversitat Pompeu FabraBarcelonaSpain
  2. 2.HEC Université de LausanneLausanne-DorignySwitzerland

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