AP PSYCHOLOGY

Detailed explanation-1: -Heuristics are mental shortcuts for solving problems in a quick way that delivers a result that is sufficient enough to be useful given time constraints. Investors and financial professionals use a heuristic approach to speed up analysis and investment decisions.

Detailed explanation-2: -The anchoring and adjustment heuristic describes cases in which a person uses a specific target number or value as a starting point, known as an anchor, and subsequently adjusts that information until an acceptable value is reached over time.

Detailed explanation-3: -What is Anchoring Bias? Anchoring bias occurs when people rely too much on pre-existing information or the first information they find when making decisions. For example, if you first see a T-shirt that costs $1, 200 – then see a second one that costs $100 – you’re prone to see the second shirt as cheap.

Detailed explanation-4: -Heuristics can be thought of as general cognitive frameworks humans rely on regularly to quickly reach a solution. For example, if a student needed to decide what subject she will study at university, her intuition will likely be drawn toward the path that she envisions most satisfying, practical and interesting.