In what circumstances is the recognition heuristic likely to work well? 

(200/250 words)

Example 

The recognition heuristic will probably be most effective when people need to make choices with little information and where the options differ significantly in familiarity. Expressly, this heuristic assumes that when one object is recognized and the other is not, the identified object will be of higher value or relevance. For example, when people predict sports results, they may see that a better-known team will probably win over an unknown one. That is an effective heuristic: in that case, the more famous team most likely has a good history of winning, thus producing better recognition. So, the heuristic studies the association between recognition and actual performance or quality.

Another scenario where heuristic might be applied is to a new investor in the stock market. A young investor may incline some specific companies that have much visibility in the market or who have good media coverage while picking up any stock. This will enable them to invest in companies that are old names and thus might have company credibility and reliability since such companies gain recognition from their consistent performance and reliability. However, it is essential to note that although the recognition heuristic can work very well, this is not foolproof and should ideally be supplemented with more information and analysis so as not to rely on familiarity alone too much. In situations where recognition is unrelated to real value or performance, the heuristic might lead to suboptimal decisions.

This application of the recognition heuristic tends to be particularly powerful in recognition-rich environments—environments in which recognized objects indeed correlate with positive values. For instance, in an ecological domain like food selection, recognizing a specific fruit or plant is likely to steer the organism towards historically salubrious and sustaining choices. Decision-makers need to be aware of the context-dependent nature of the recognition heuristic, since its effectiveness does not hold in cases where recognition is not a good cue to the quality and success.