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An exploratory study of heuristics for anticipating prices

Timo Ehrig (Strategy and Innovation, Copenhagen Business School, Frederiksberg, Denmark)
Konstantinos V. Katsikopoulos (Decision Analytics and Risk, University of Southampton Business School, Southampton, UK)
Jürgen Jost (Geometry and Complex Systems, Max-Planck-Institut für Mathematik in den Naturwissenschaften, Leipzig, Germany)
Gerd Gigerenzer (Adaptive Behavior and Cognition, Max-Planck-Institut für Bildungsforschung, Berlin, Germany)

Management Decision

ISSN: 0025-1747

Article publication date: 29 June 2021

Issue publication date: 17 August 2021




This research explores how investment and central bankers cope with strategic uncertainty when they anticipate prices. The uncertainty originates from others' decisions and their consequences, and cannot be meaningfully reduced to risk. The authors postulate that, in order to cope with this type of uncertainty, bankers use simple rules, also called heuristics. This study aims to identify such heuristics and the psychological processes that underlie them.


The authors interviewed 22 managers of teams tasked to anticipate prices, in two leading investment and central banks. The primary data came from in-depth, semi-structured interviews lasting 30–60 min, supplemented by our observations during the on-site visits, emails and phone calls when preparing the interviews, and reports published by the banks. Data were coded and heuristics were induced over multiple rounds by multiple researchers.


Bankers (1) construct simple game representations of markets, (2) make inferences to gauge opponents, (3) become alert when they see too much agreement and (4) communicate coherent narratives. Heuristics (1)–(3) are employed when the pace of decision-making is fast, whereas (4) is used for longer time scales. In sum, bankers exhibit reciprocal bounded rationality, wherein interaction partners are mutually aware of and adapted to the fundamental uncertainty of the task and their limited resources.


Heuristics for anticipating prices have not been studied empirically outside the lab. The findings may help integrate conceptualizations of heuristics in the simple-rules and fast-and-frugal-heuristics research programs and improve market efficiency.



Ehrig, T., Katsikopoulos, K.V., Jost, J. and Gigerenzer, G. (2021), "An exploratory study of heuristics for anticipating prices", Management Decision, Vol. 59 No. 7, pp. 1750-1761.



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