Recognition heuristic
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According to the recognition heuristic, when making a judgment about two items, the more easily recognized item will be considered to have a higher value.
Daniel Goldstein and Gerd Gigerenzer showed students in Germany and the United States lists of pairs of German and American cities. Each group was equally adept at picking the city with the larger population of each pair, despite differences in familiarity in the other country's geography. The experimenters theorized that the students were able to pick the right answers most of the time because they used a heuristic, according to which the more-recognizable city had a higher value.
In another experiment, "naive investors" were able to pick a stock portfolio that outperformed ones picked by professional traders by picking stocks of companies that they recognized.
References
- Goldstein, D. G., & Gigerenzer, G. (2002). Models of ecological rationality: The recognition heuristic. Psychological Review, 109, 75-90. [Full text (PDF)].
- Goldstein, D. G., & Gigerenzer, G. (1999). The recognition heuristic: How ignorance makes us smart. In G. Gigerenzer, & P. M. Todd, (Eds.). Simple heuristics that make us smart. Oxford: Oxford University Press.
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