According to the recognition heuristic, people infer that an object they recognize has a higher value on a criterion of interest than an object they do not recognize. This model has been analyzed mathematically and conditions for the less-is-more effect -- where recognizing fewer objects...

Distinguishing between risk and uncertainty, this paper draws on the psychological literature on heuristics to consider whether and when simpler approaches may outperform more complex methods for modelling and regulating the financial system. We find that: (i) simple methods can sometimes...