The Affect Heuristic
Abstract
The experimental part of the human mind has the ability to label objects and experiences with emotions. These labels are defined by Paul Slovic et al. as somatic markers in his paper on the affect heuristic. The affect heuristic is the act of using the somatic markers as a short-cut to make quick decisions or judgments (p.1336). This can be done consciously, but in most cases, it is done unconsciously, even before the mind has had the time to think up rational justification. With enough experience and knowledge, this method of making decisions can be highly efficient and flexible – especially when it is used consciously. However, affect can easily be manipulated, both by ourselves and our environment. Bounded rationality is our ability to choose how rational we want to be when deciding, while bounded awareness is our ability to filter information and impressions. Both limit the efficiency of our decisions since it keeps the mind from realizing all possible outcomes. The environment can manipulate the information we get and how it is presented. This also affects how we feel about situations and anticipated outcomes. The somatic markers also offer the ability to anticipate outcomes, which means it is very useful in risk management. If the decision-maker has had a similar experience to the situation they are analyzing, they can use the affect heuristic to identify risks, their probability, and their impact quickly. Another thing to be aware of is the fact that the human tends to perceive risk and benefit differently from reality. Rationally high risk can end in high reward and vice versa. However, most people find that when their personal benefit is high enough, the risk is smaller. Therefore, it is essential to know what lies behind decisions. Knowing how the mind makes decisions can also help backtrack bad decisions or even prevent them since the decision-maker is now aware of his/her bias.
Keywords: Affect Heuristic, Slovic, Bounded Rationality, Bounded Somatic Markers
References will be added when more information has been given about them in the lectures.
Contents |
Background
The Impact of Affect in Decision Making
The Perception of Risk and Benefit
The Affect Heuristic in Risk Management
Benefits of the Affect Heuristic
Limitations of the Affect Heuristic
References
Current -> May change
1. Slovic, P., Finucane, M., Peters, E., & MacGregor, D. G. (2007): The Affect Heuristic. Reprinted from Glivovich, T., Griffin, D., Kahneman, D. (2002), Heuristics and Biases: The Psychology of Intuitive Judgment.
2. Züst, R. & Troxler, P. (2006): No More Muddling Through: Mastering Complex Projects in Engineering and Management.
3. Bazerman, M. & Moore, D. (2013): Judgment in Managerial Decision Making.
4. Project Management Institute, Inc. (PMI), (2019): Standard for Risk Management in Portfolios, Programs, and Projects. Retrieved from https://app.knovel.com/hotlink/toc/id:kpSRMPPP01/standard-risk-management/standard-risk-management.
