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Numerical Methods and Optimization in Finance by Enrico Schumann, Dietmar Maringer, Manfred Gilli

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Chapter Twelve

Heuristic Methods in a Nutshell

Publisher Summary

This chapter outlines the basic principles of heuristic methods and summarizes several well-known techniques. The term heuristic is used in various scientific fields for different, though often related, purposes. In mathematics, it is used for derivations that are not provable, sometimes even formally false, but lead to correct conclusions nonetheless. The term was made famous in this context by George Pólya. Psychologists use the word heuristics for simple rules of thumb for decision making. The term heuristic is also used in computer science; Pearl describes heuristics as methods or rules for decision making that are simple and give good results sufficiently often. Among computer ...

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