The Introduction and Applications of Representativeness Heuristics
DOI:
https://doi.org/10.54691/bcpssh.v19i.1804Keywords:
Representativeness Heuristic, Behavioural Finance, Investment Decision-making, Citizen GovernanceAbstract
Representativeness heuristic is one of the major cognitive shortcuts behaviours that instead a question of probability on one of similarity. Individuals are good at using representativeness method to solve problems since it is easier and faster to evaluate how closely the problem corresponds to a similar one. However, the customary use of representativeness heuristic may generate severe biases and errors by mental shortcuts, especially on judgements and probability estimations processes. Nowadays, the study of representativeness heuristic has practical significances and widely influences on residential daily activities and commercial operations from decision-making perspective. This paper will continue on analysing the representativeness heuristic further regarding to its fundamental theory, connotation, and applications on different fields to explain how representativeness heuristic to affect people’s decision-making processes and other behaviours imperceptibly through a qualitative research method. By means of analysing three cases in stock market, political behaviours, and medical diagnosis, this paper finds that it is possible to avoid the biases and errors caused by representativeness heuristic mental shortcuts through practicing systematically and increasing awareness effectively.
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