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Efficiently irrational: deciphering the riddle of human choice [pdf]
- telotortium 4y agoAbstract: > For the past half-century, cognitive and social scientists have struggled with the irrationalities of human choice behavior; people consistently make choices that are logically inconsistent. Is human choice behavior evolutionarily adaptive or is it an inefficient patchwork of competing mechanisms? In this review, I present an interdisciplinary synthesis arguing for a novel interpretation: choice is efficiently irrational. Connecting findings across disciplines suggests that observed choice behavior reflects a precise optimization of the trade-off between the costs of increasing the precision of the choice mechanism and the declining benefits that come as precision increases. Under these constraints, a rationally imprecise strategy emerges that works toward optimal efficiency rather than toward optimal rationality. This approach rationalizes many of the puzzling inconsistencies of human choice behavior, explaining why these inconsistencies arise as an optimizing solution in biological choosers.
- nopinsight 4y agoA hypothesis I came up with a few years ago: Stereotyping is a result of the brain optimizing for efficient use of limited data and compute. Humans often over-generalize and come up with possible/plausible though unnecessarily true inferences. (And since the mechanism is likely evolved, countering stereotyping requires active training and conscious awareness of the tendency). Note: I only read the introductory paragraph but it looks like the above hypothesis is related to the paper.
- panarky 4y agoSounds like the "System 1" portion of Daniel Kahneman's book "Thinking, Fast and Slow" from 2011. "System 1" is fast, reflexive, automatic, emotional, unconscious and easy. It's based on shortcuts and stereotypes, often gets things wrong. "System 2" is slow, deliberate, difficult, calculating, based on focused reasoning and cognition. Since "System 2" requires so much effort, most people spend most of their waking lives in "System 1". https://en.wikipedia.org/wiki/Daniel_Kahneman https://en.wikipedia.org/wiki/Daniel_Kahneman
- cinntaile 4y agoIgnore the system I parts about priming though, they have had trouble replicating those studies.
- telotortium 4y agoNeed to do a full read-through, but part of what this paper seems to say is that the System 1 vs. System 2 dichotomy is not the best description of how we make decisions. From Page 5: > How can one make sense of such inconsistent behavior? One answer [16] drawn from the multiple-selves model is that our brains have two independent modules: an ‘impulsive’ chooser, which only values immediately available rewards; and a ‘rational’ patient chooser, which values all rewards as a function of the delay-to-reward duration. In this conception, human behavior represents the combined action of these two modules, each internally consistent when acting alone, but yielding strongly intransitive behavior when combined. and page 7: > Could it be that there is a unitary representation of a single utility-like signal, rather than the many competing signals predicted by multiple-selves theory? > At the same time, a similar examination of another behavioral pattern sometimes seen as an inconsistency, loss aversion, yielded similar results [47]. Humans often treat losses relative to the reference point as more consequential than equivalent gains, presumably because losses are more anxiety‐provoking. In this study, brain activity was examined as decision-makers evaluated financial lotteries that involved varying levels of gains and losses. As in intertemporal choice, these data revealed that human choosers were inconsistent, but that this inconsistency did not appear to arise from multiple modules, one only anxious and one only logical. Instead, the study revealed that several brain areas irrationally encoded losses and gains asymmetrically, but not by using multiple independent modules (but see [48] for one counter-example). > A series of three subsequent meta-studies strongly support this conclusion that a single decisionvariable is represented neurally and that emotional and rational evaluations are fully integrated [49–51]. All three of these metastudies, together aggregating data from hundreds of studies, tell the same story. Value representations in the brain do not reflect multiple competing agents. Instead, these data suggest that the irrationalities we observe in behavior reflect a fundamental irrationality in the neural representation of subjective value, in humans, nonhuman primates [52], rodents [53], and perhaps even insects [54]. The representation of subjective value appears fundamentally imperfect, but imperfect in similar ways, in animals separated by hundreds of millions of years of evolution.
- ouid 4y agoNick didn't lose 827 million dollars. Nick lost his job. Nick behaved rationally. Every choice was a choice between certainly losing his job, and maybe losing his job.
- rawgabbit 4y agoCorrect. I find this argument better explains the Nick Baring irrationality than the "Cognitive Overload" theory as detailed in the article or the "reference point" theory also mentioned. Nick framed the problem as losing/not losing his job. He didn't think in terms of a multi equation, multi variable math problem. From what I know of gamblers who lost their life savings in Vegas. They said something similar. They lost a small nominal amount. Their losses increased when they tried to recoup their losses by taking riskier losing bets. That is they framed the problem as loss/not loss. That is people will literally risk everything they have to prevent a small loss.
- ouid 4y agoI believe that you have missed my point. Nick behaved rationally. Someone lost 827 million dollars, but it wasn't Nick. Nick lost his job.