Heuristic Approaches in Finance

Heuristic approaches in finance are simple decision-making rules or mental shortcuts that investors and analysts use to evaluate investments or market conditions quickly. Instead of analyzing every detail, they rely on experience, patterns, or common sense to make choices efficiently. While not always perfect, heuristics help manage complex financial information and reduce cognitive effort, especially in uncertain or rapid situations. However, they can sometimes lead to biases or errors if overly relied upon. Overall, heuristics are practical tools for navigating financial decisions when time or information is limited.