ABSTRACT
This chapter shows that people often make judgments and decisions on the basis of judgment heuristics. As a result of the judgment heuristics, incorrect estimations with negative consequences often come about. Knowledge and understanding of the heuristics allow for better explanations and understanding of people's behavior and the knowledge can be of use with regard to practical problems. Judgment heuristics and the errors connected with them are certainly not anomalies, as is often assumed; rather they indicate the norm, the rules governing human thought. The relevance of judgment heuristics lies in the fact that they constitute further evidence of the limited validity of the homo economic model. People operate in accordance with a limited perceptual capacity and with limited information processing capacity and as such are far removed from the economic model of the error free operation of a utility maximizing machine. A central element of product management is brand policy.
