Judging likelihood or feeling regret based on how easily an alternative outcome can be mentally imagined.
Imagine you're at a carnival and you throw a ball at a stack of bottles. If you miss by a mile, you shrug it off. But if the ball just barely grazes the top bottle and it wobbles but doesn't fall, you feel way worse — because your brain instantly plays a little movie of the bottle falling over with just a tiny bit more force. Your brain judges how bad or good something is by how easily it can imagine a different ending.
The simulation heuristic describes the mental process by which people construct imaginary scenarios—alternative versions of events that did or could happen—and use the ease of that construction to judge probability, causality, and emotional impact. When an outcome feels easily 'undone' through small mental tweaks (such as leaving five minutes earlier to catch a flight), the person experiences stronger emotional reactions like regret or relief, regardless of whether those tweaks would have actually changed the objective probability. This heuristic is especially powerful in near-miss situations, where the psychological distance between what happened and what could have happened is small and vividly imaginable. It also drives anticipatory regret, causing people to avoid decisions where they can easily picture a negative outcome unfolding.
The same glitch looks different depending on the terrain. Finance, medicine, a relationship, a team — same mechanism, different costume.
Investors experience outsized regret over stocks they nearly bought that subsequently soared, leading to impulsive 'revenge' purchases of similar assets. The ease of mentally simulating 'I almost clicked buy' distorts future risk assessment more than actual portfolio losses from positions they held.
Patients who narrowly miss qualifying for a clinical trial or treatment threshold experience greater distress than those who were far from eligibility, even when the medical prognosis is identical. Clinicians may also feel disproportionate guilt over adverse outcomes that followed small, easily reversible decisions (choosing drug A over drug B) compared to outcomes from standard protocols.
Daniel Kahneman and Amos Tversky, first presented in a 1979 lecture and formally published as a chapter in 'Judgment Under Uncertainty: Heuristics and Biases' (1982).
The ability to mentally simulate alternative outcomes likely evolved as a planning and learning mechanism. Ancestors who could vividly imagine 'what would have happened if I had gone left instead of right' could extract causal lessons from near-misses with predators, failed hunts, or environmental hazards — refining future behavior without paying the full cost of repeated trial and error.
Generative language models trained on human text absorb the simulation heuristic's patterns by overrepresenting vivid, easily-narrated counterfactual scenarios in their outputs. When asked to assess risk or generate explanations, LLMs may emphasize 'near miss' narratives and mutable factors over statistically more relevant but harder-to-imagine base rates, mirroring human tendencies to equate imaginability with probability.
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