Tag Archives: heuristics

Bounded Rationality: The Adaptive Toolbox

2012-11-30 13.16.23-1Gerd Gigerenzer and Reinhard Selten provide a good summary of this topic in “Rethinking Rationality.” This is the introductory chapter to Bounded Rationality, which they edited. To connect the rational and the psychological, bounded rationality includes emotions, social norms, imitation, and other cultural tools. The initial modern definition of rationality was created in about 1654 by Blaise Pascal.  That definition was simply to maximize expected value.  Blaise Pascal saw it as creating a new form of morality as well–replace faith with moral expectation.  That definition ran into trouble with the St. Petersburg paradox, and Allais, and Ellsberg paradoxes. So David Bernouilli redefined rationality as maximizing expected utility.  Bounded rationality was created by Herb Simon in the 1950s.  Optimization was not part of this new rationality.  The metaphor for bounded rationality was a pair of scissors, one blade is “cognitive limitations” and the other is the “structure of the environment.” In Herb Simon’s words written in 1956: “a great deal can be learned about rational decision making…by taking account of the fact that the environments to which it must adapt possess properties that permit further simplification of its choice mechanisms”.  Gigerenzer argues that simple and robust heuristics can match a specific optimizing strategy.  Different researchers see “bounded rationality” differently.  Gigerenzer says it is not optimization nor irrationality nor is it optimization under constraints which includes limited search, but then requires cost/benefit of further search.  Gigerenzer’s model of bounded rationality uses fast and frugal stopping rules (when to stop search) that do not involve optimization.  Kahneman and others have pointed out humans falling short of rationality in such things as the base rate fallacy and conjunction fallacy.  Gigerenzer & Selten contend that these fallacies are “based on norms that have been put forth without analzying the structure of the environments… Moreover, when information is presented in natural frequencies rather than probabilities, base rate neglect is perfectly rational.”

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Intuition in J/DM

2012-09-08 16.24.54Intuition is slippery to define. Robin Hogarth used thoughts that “are reached with little apparent effort, and typically without conscious awareness” in Educating Intuition.  Gigerenzer and his associates call humans “homo heuristicus” and emphasize effort reduction and selective information processing.   For instance, the lexicographic heuristic has us starting by comparing alternatives on the most important dimension.  If there is a difference, we choose the best and do not seek any more information.

I find the discussion by Tilmann Betsch and Andreas Glockner in “Intuition in Judgment and Decision Making:  Extensive Thinking Without Effort” appealing.  They see heuristics as just a part of intuition.  Heuristics, largely, seem to simplify analytic thought by leaving out effort filled information processes or by reducing the amount of information considered.  Betsch and Glockner claim that “intuition is capable of dealing with complex tasks through extensive information processing without noticeable effort.”

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Justifying our Decisions: Great for Plausible Deniability, not so Great for Medical Diagnosis

Sadly, Larry had always approached from the side that wasn't posted and a natural treasure was destroyed before anyone could react

Sadly, Larry had always approached from the side that wasn’t posted and a natural treasure was destroyed before anyone could react

I am looking at the idea of “justification” as discussed separately by Kenneth R Hammond, Jonathan Haidt, and Steve Catty and Jamin Halberstadt.

Ken Hammond created the JDM metatheory dichotomy of coherence and correspondence.  Coherence tests decisions on rationality while correspondence tests decisions on empirical accuracy.  Coherence advocates start with the mind of the decision maker.  In examining rationality of judgment, the main criterion is consistency.  Bayes’ theorem is the model for mathematical coherence of decision making. Coherence focuses on justification.  It describes departures from “ought” coherence.

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