• Heuristics are quick problem solving methods that produce enough results to be useful under time constraints.
  • Investors and financial professionals use a heuristic approach to speed up analysis and investment decisions.
  • Heuristics can lead to bad decisions based on a limited set of data, but decision speed can sometimes make up for the shortcomings.
  • Behavioral economics has focused on heuristics as one of the constraints that limit the behavior of people as rational actors.
  • Availability, anchoring, confirmation bias, and hot hand fallacy are some examples of heuristics that people use in their economic lives.