On the Accuracy of Bounded Rationality: How Far from Optimal Is Fast and Frugal?

Fast and frugal heuristics are well studied models of bounded rationality. Psychologicalresearch has proposed the take-the-best heuristic as a successful strategy in decision making with limited resources. Take-thebest searchesfor a sufficiently good ordering of cues (features) in a task where objects are to be compared lexicographically. We investigate the complexity of the problem of approximating optimal cue permutations for lexicographic strategies. We show that no efficient algorithm can approximate theoptimum to within any constant factor, if P NP. We further consider a greedy approach for building lexicographic strategies and derive tight bounds for the performance ratio of a new and simple algorithm. This algorithm is proven to perform better than take-the-best.