Abstract:   Correlation heuristic is a mental model in which judgment bias in understanding accumulation is aroused when people correlate accumulations and flows and assume that the patterns of accumulations and flows are similar. Correlation heuristic bias, termed as “stock-flow failure”, can be found in understanding interactive dynamic systems. Due to lack of appreciation of the basic principles of accumulation, individuals tend to use this heuristic, where they intuitively assume that the pattern of stock highly correlates with the pattern of inflow or net flow. They attempted to match the stock’s trajectory along with the inflow rate. Research shows that correlation heuristic bias is common in decision making for simple as well as multi-faceted decision making tasks. The heuristic has significant implications in business management decision making and is not conducive for people’s sustainable decision-making. Results of research on the individual factors such as object bias, attribution substitution, and insufficient adjustment and contextual factors that may influence correlation heuristics are inconsistent. Empirical studies that explore factors impacting correlation heuristics have emerged. Effort to explore ways of reducing such bias has started. This article systematically reviewed the correlation heuristic literature and recommended areas to be further explored in future studies, including clarifying its inner mechanism, digging into potential influencing factors and their interactions, enhancing research paradigms, and developing methods that can reduce correlation heuristic.

Key words:  correlation heuristic, accumulation variable, stock-flow failure, stock, flow