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Innovation

The Availability Heuristic, Green Tees & Decision Making

September 11, 2017

6 min read

So what is the availability heuristic exactly?

In a study, participants listen to either:

A list of 19 famous women and 20 less famous men

A list of 20 famous men and 19 less famous woman

Afterwards, some were asked to recall the names they could remember, and then if the list they had heard contained more men or women.

Unsurprisingly, the famous names were more readily recalled; but, interestingly, the vast majority of participants then incorrectly assumed that the gender of the more famous people were the majority gender in the list they heard.

This is an example of the Availability Heuristic.

The Availability Heuristic refers to how our minds take the information easily at hand – the famous people (the available information) – and use it to assess probability.

A heuristic is an imperfect solution – often a mental shortcut we make to form judgements quickly – and that’s exactly what this is. When evaluating probability, we do not always have perfect data; and even if we do, our minds cannot sift through it all like a computer algorithm.

As a result, sometimes our minds take easy steps or shortcuts.

Our fickle mind

As Kahneman and Tversky wrote in 1974, the Availability Heuristic works on the following principle:

If you can think of it, it must be important.

Clearly, there is a problem with this. We are biased to what is easy to remember.

Kahneman says, for example, that ‘one may assess the risk of heart attacks among middle-aged people by recalling such occurrences among one’s acquaintances’.

We take our life’s experiences, and map it onto the real world to give it shape.

The problem is that the availability of that information is affected by things other than probability; the information could be recent, and therefore fresh, like a news-flash on shark attacks provoking undue fear; or it could be because of a strong emotional reaction we have to, say, heart attacks.

If we have lots of peers who have had heart trouble, then we are likely to call those people to mind; the more examples we have, the more frequent we are going to believe heart attacks to be.

It’s a distant cousin of Denominator Neglect; essentially, we skew the probability of an event occurring because our minds are imperfect data processors.

It’s not all bad

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The heuristic can be useful. Take the following question:

Are there more words beginning with T or K in the English language?

Naturally, you start flicking through examples in your mind.

Most people say T, with reasoning along the lines of: ‘I can think of more words beginning with T, so it’s probably that’.

But… you’re spot on. There are more words beginning with T. Is it a lucky guess? Partly.

The difference here is that your mind is comparing two sets of probability, and, as a result, the examples you think of are more than just vague memories – they are verified data points that start a quantifiable comparison between the words.

Sometimes the shortcut is the best we can do, and, in want of better options, an educated guess is our best tool.

Honing the heuristic – what it means for you

Avoiding the Availability Heuristic is impossible. It’s a natural part of how we assimilate data.

The problem is not that our minds take the shortcut – it’s that the shortcut can go unchecked and unnoticed, and become an easy route to lazy assumptions.

In the question about T or K words, the shortcut – randomly thinking of examples – is the best possible route, assuming that you do not have unlimited time, paper, a pen and a dictionary. Or Google.

It is important to recognise when you take the shortcut. Only then can you recognise the implicit bias in your thought process; that is the difference between thinking:

‘I can think of more words that begin with T than K. It’s not a perfect answer, but it is the best I can do without a pen and paper, dictionary, and time’

and

‘I can think of more words that begin with T than K, therefore T is the answer’

The business case

You have to make a decision: you have to pick a style of t-shirt to put into production.

One is blue, one is green.

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For whatever reason, you have seen three people wearing green t-shirts today, including a colleague who fits the same profile as your target market. You saw dozens of blue t-shirts last week, but you probably can’t even remember them.

It’s hard to quantify, but the chances are you would instinctively feel the green t-shirt is more popular.

This demonstrates how the heuristic is really a kind of reversed confirmation bias.

In confirmation bias, you start with a belief – that green t-shirts are more popular than blue –  and then seek out examples to support it – and you only notice green t-shirts, even though there are as many blue ones about today.

In the Availability Heuristic, you start with the examples – the green t-shirts you see today – and ignore the blue ones from last week, to found a belief.

The cognitive process is obviously different, but I highlight the reversal to demonstrate just how potent the Availability Heuristic is, and how a relatively unknown phenomenon can cause the same problems as confirmation bias. Confirmation bias has been in vogue for a while; let’s start talking about this, too.

An answer to the availability heuristic

One of the reasons we have to rely on the availability heuristic so much in business is that finding neutral, unbiased data points can be slow, difficult and expensive. In other words – market research.

Going back to the t-shirt production example, it may be that you can proceed with a short production run, keeping risk to a minimum, and getting an unbiased viewpoint from your target market would just be too much using traditional market research.

However, this is why we created Attest – offering a fast, flexible, simple and affordable way for decision makers to avoid having to rely on the availability heuristic.

Asking for hands up around the office, or polling your friends and family, just isn’t good enough when real profit and loss is on the line.

If you can get valuable data back within 24 hours, why wouldn’t you?

This is where you can stop saying:

‘I think green t-shirts are going to be most popular. It’s not a perfect answer, but it is the best I can do without market research’

And instead say:

‘I shouldn’t base a decision on my gut instinct. It could be right, but it could equally be wrong. I’m going to spend a day getting better data on which to base my decision.”

In conclusion

The availability heuristic is powerful and unavoidable, but as a business leader it’s important you recognise when it’s at work, and consider the benefits of making more insightful data available to you and your team, so you can ultimately make better judgements.

Learn more about how we can help you make consistently better commercial decisions.

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