Heuristics And Systematic Decision Errors

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Heuristics and systematic decision errors are made even in extremely large or important purchases. A year ago, my sister and her husband moved to Houston from New York City and decided to purchase their first house. Having never lived in Houston, or purchased a house, they had very little inherent knowledge about the local real estate market or experience with what their lifestyle was going to be. Their decisions therefore would be based almost entirely on published data and first hand house visits.
Jennifer and Jimmy are both medical doctors, eminently rational and meticulous about their finances, their careers, and life planning. When deciding which medical residency programs to apply to, a 100 row spreadsheet was constructed, detailing and weighting each desirability factor. They trusted the same analytical approach with their house purchase decision; for the purposes of this discussion I’ve condensed their table as follows:
House A
House B
Commute Time
45 minutes
10 minutes
Quality of Space
Relative Price
While Jennifer and Jimmy recognized that the daily Commute Time was an important attribute, it ended up being severely underweighted in their final decision. Having just moved from New York City, neither had ever dealt with traffic or extended highway driving on a regular basis. While it was obvious that a 10 minute commute is quantitatively better than a 45 minute one, the qualitative difference to happiness and lifestyle was very hard for
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