Ignorance is Bliss: A Study on How and Why Humans Depend on Recognition Heuristics in Social Relationships, the Equity Markets and the Brand Market-Place, Thereby Making Successful Decisions

Abstract

A concise look in three unrelated, yet complex environments reveals a strong human dependence on the recognition heuristic. Its marketability to the mind as a good decision making tool (over other complex approaches), is shown to be almost innate and ultimately successful. The three environments, social relationships, equity markets and the brand market place, all bombard the human with a myriad of data and information. Usage of the recognition heuristic is a form of filtering, an efficient means of making a successful decision within limited resources.

Keywords: Heuristics,Recognition,recognition heuristics,portfolio construction,brand heuristics,affect,bounded rationality,ecological rationality,social relationships,decision theory,multi-attribute choice,expected utility,equity valuation models,sharpe ratio,high return strategy

JEL Classification: G10, G11, G12, C11, C44, D4