This proposes the “Priority Heuristic” as a way to explain “evidence at variance with expected utility” in studies in which people choose between two conditions with varied payoffs and probabilities.
The Heuristic is:
Priority Rule: Go through reasons in the order: minimum gain, probability of minimum gains, maximum gain.
Stopping Rule: Stop examination if the minimum gains differ by 1/10 (or more) of the maximum gain; otherwise stop examination if probabilities differ by 1/10 (or more) of the probability scale.
Decision Rule: Choose the gamble with the more attractive gain (probability)
The numbers in the stopping rule will vary based on and individual’s “aspiration level” and can be influenced by the cognitive tenancy to “clump to prominent numbers” (e.g. holding $19 internally as $20).
Scenario, subject chooses either:
A) 50% chance of $200 or B)100% chance of $100
1/10 of the max gain ($200) is $20, which would be ‘good enough’ for most people, so B is the better choice. This is meant to capture that people don’t want to feel like they ‘lost’ something by missing out on a smaller gain. (If I risk it for the $200, I lost out on the $100)
The Priority Heuristic: Making Choices without Trade-offs
Eduard Brandstätter, Gerd Gigerenzer, Ralph Hertwig
Chapter 7 (153-184)
Heuristics The Foundations of Adaptive Behavior
Edited by Gerd Gigerenzer, Ralph Hetwig, Thorsten Pachur