If you were the senior loan officer in the bank in Question 30.3, would you support this
If you were the senior loan officer in the bank in Question 30.3, would you support this suggestion?
Data From Question 30.3
A bank uses a set of 20 questions to assess the financial position of applicants for loans. Since introducing this approach 5 years ago, it has found that only 1 per cent of loans granted have proved to be irrecoverable. Previously, a far less complex and more informal approach was used in the lending decision and 5 per cent of loans were irrecoverable. A loan officer has recommended that the number of questions used be reduced to 4 because the other 16 do not seem to have been relevant in the case of any of the defaulting loans that arose in the past year. He argues that this will save time and money and that it will avoid any need to undertake some of the more complex and harder-to-resolve investigations that are required in the current approach. Which form of heuristic does this suggestion represent?
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