Routledge Handbook of Bounded Rationality

Cover
Half Title
Title Page
Copyright Page
Table of contents
Contributors
Preface
1 Why bounded rationality?
Part I Naturalizing bounded rationality
Part II Cognitive misery and mental dualism
Part III Ockam’s razor: mental monism and ecological rationality
Part IV Embodied bounded rationality
Part V Homo Oeconomicus Bundatus
Part VI Cognitive organization
Part VII Behavioral public policies: nudging or boosting?
Notes
References
2 What is bounded rationality?
Simon’s bounded rationality
Risk and uncertainty
As- if and real decision- making processes
Behavior = f (cognition, environment)
Bounded rationality as optimization under constraints
Bounded rationality as irrationality
Homo heuristicus, Homo economicus, and Homer
The ecological rationality program: Homo heuristicus
The adaptive toolbox
Ecological rationality of heuristics
Ecological rationality of beliefs
Guidelines for the study of decision making under uncertainty
References
Part I Naturalizing bounded rationality
3 Towards a critical naturalism about bounded rationality
Introduction
The “standard picture”: three normative systems of rationality
Two objections to the standard picture
Naturalism: its aims, scope, assumptions, and problems
Naturalism about (bounded) rationality
Conclusion: for a critical naturalism about rationality
Acknowledgments
Notes
References
4 Bounded rationality: The two cultures
Introduction
The two cultures: differences in modeling
What do the labels “idealistic” and “pragmatic” mean?
Optimization
Testing models
The two cultures: different stories about people’s bounded rationality and how to improve it
The story told by the idealistic culture
Nudge or boost?
Conclusion
Acknowledgments
References
5 Seeking rationality: $500 bills and perceptual obviousness
Introduction
Economics, bounded rationality, and perception
What do we see and why? What’s obvious?
Perception and rationality
Insights from psychology and biology
Perception and the organism-environment relationship
Seeking or “looking for” rationality
Rationality and the perception of value
Opportunities and caveats
Conclusion
Acknowledgments
Notes
References
6 Bounded rationality, distributed cognition, and the computational modeling of complex systems
Introduction
Modeling tasks in systems biology
Mesoscopic modeling and the building-out strategies
Cognitive analysis: distributed model-based reasoning
The bounded rationality of model-building practices in systems biology
Conclusion
Note
References
7 Bounded rationality and problem solving: The interpretative function of thought
Heuristics and insight problem solving
The challenging issue of insight problem solving
The role of unconscious analytic thought in insight problem solving: the emergence of the shadow area
Restructuring as reinterpreting: the interpretative heuristic
Part III Occam’s razor
16 Bounded reason in a social world
Introduction
An interactionist view of reason
When is reason triggered?
How does reason recognize good reasons?
How does reason find reasons?
Reason with limited resources works well in the right social setting
Conclusion: a bounded reason mechanism?
Acknowledgments
References
17 Rationality without optimality: Bounded and ecological rationality from a Marrian perspective
Does rationality imply optimality?
Marr and Poggio’s three levels of analysis
The statistical foundations of ecological rationality
The role of statistics in constructing the rationality problem
Orthodox rationality and the statistical culture of data modeling
Ecological rationality and the statistical culture of algorithmic modeling
Bayesian reductionism and the limitations of optimal function
Argument 1: Bayesian thinking is required to explain functional success
Argument 2: Bayesian explanations of functional success should be preferred
Argument 3: All learning algorithms imply an optimal Bayesian response
The theory-dependence of Marrian decomposition
Ecological rationality from a Marrian perspective
The limits of Marrian decomposition: type-1 and type-2 theories
Rationality without optimality
References
18 The winds of change: The Sioux, Silicon Valley, society, and simple heuristics
Introduction
The fast-and-frugal heuristics framework
The research questions of the science of simple heuristics
On environments and heuristics
Modern-day dramatic change: from buffalo hunting on the Great Plains to the fruits of Silicon Valley
What might future aversive digital environments look like?: interconnectedness, influenceability, and traceability
What heuristics might people rely on to navigate through aversive digital environments?
What might future aversive digital societies, shaped by defensive, social, and offensive heuristics, look like?
How can heuristics aid individuals to manage aversive change?
How can heuristics aid societies to manage aversive change?
Digitalization: from evolution to the children of evolution
Conclusion: compassion in the winds of change
Acknowledgments
Notes
References
19 Ecological rationality: Bounded rationality in an evolutionary light
Bounded rationality as proximate, ecological rationality as ultimate analyses
Decision making: driven by goals, shaped by ecological structure and variability
Cue-based behavior: fast and frugal exploitation of statistical regularity
Fitting the right tool to the right context: ecological rationality in action
When behavior and beliefs diverge from expectations
Future directions in research on ecological rationality
References
20 Mapping heuristics and prospect theory: A study of theory integration
Two modeling approaches for boundedly rational risky choice Cumulative prospect theory
Heuristics
Mapping heuristics onto CPT
What shapes of CPT’s weighting and value function do heuristics produce?
Characterizing changes in the behavior of heuristics across environments
Connecting phenomena
Conclusion
Acknowledgments
Notes
References
21 Bounded rationality for artificial intelligence
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The comparison problem
Comparison using simple decision heuristics
When are decision heuristics accurate?
An illustrative example
How prevalent are “easy” problems?
Sequential decision problems
Concluding remarks
Notes
References
22 Psychopathological irrationality and bounded rationality: Why is autism economically rational?
Deductive irrationality in madness?
From coherence to correspondence: the goal of cognitive success
What is cognitive success?
Are syntactical rules adaptive?
Heuristics and ecological rationality
Social rationality
Ecological irrationality of psychiatric disorders
Impermeability to environmental feedbacks
Disabled social learning
Distorted emotions as building blocks
Some paradoxes of psychopathological irrationality
Greater logical rationality in psychiatric patients
Ecological rationality of the paranoid mind?
Conclusion: what role for the brain?
Acknowledgments
Notes
References
Part IV Embodied bounded rationality
23 Embodied bounded rationality
The root of bounded rationality in cognitive psychology and the bounds of embodied cognition
The morphology of the human body and the sensory-motor system in cognition
A more complex view of Simon’s scissors
Rules of thumb: embodied heuristics
Affordances and heuristics
Heuristics and embodied emotions
Embodied representations and simulations
The disembodied approach of current social neurosciences
Conclusion
Notes
References
24 Extending the bounded rationality framework: Bounded-resource models in biology
Brainwiring optimization
Genome as nanobrain
References
25 How rationality is bounded by the brain
What is rationality?
The recognition of irrationality
Brain size and speed
Brain integration of cognition and emotion
Brain limitations on attention and consciousness
Conclusion: helping brains to be more rational
Acknowledgments
References
26 Building a new rationality from the new cognitive neuroscience
The theory of mind within the theory of games
Building a new rationality from the new cognitive neuroscience
Flexibility and blending
Selves and choices in wayfinding
Collective action in the wild
Selves and choices in cognitive neuroscience
The brain as an imagination engine for selves and stories
The search for neuroscientifically relevant human psychological factors (NRPs)
Dynamical cognition
Towards a new model of rationality
Conclusion
Note
References
Part V Homo Oeconomicus Bundatus
27 Modeling Bounded Rationality in Economic Theory: Four examples
Introduction
Bounded rationality and mechanism design
Bibliographic notes
Bibliographic notes
Long interactions and finite automata
Bibliographic notes
Agents with different models in mind
Bibiliographic notes
Acknowledgments
References
28 Bounded rationality, satisficing and the evolution of economic thought: Diverse concepts
Introduction
An initial sketch of bounded rationality in economic thought
Different meanings of rationality and the further development of economic thought, including the concept of ecological rationality
Satisficing and bounded rationality
Discussion
Conclusion
Notes
References
29 Beyond economists’ armchairs: The rise of procedural economics
Outcome vs. process in modeling choice
Background and focus
The satisficer: the poster child of bounded rationality
Economics: thesis, antithesis, synthesis
What substantive and procedural rationality (don’t) share
Conclusion
Notes
References
30 Bounded rationality and expectations in economics
Introduction
Bounded rationality and expectations
Cognitive limitations and learning
Conclusion
Notes
References
31 Less is more for Bayesians, too
Asymmetric information in strategic games
Good by Savage
Uncertainty and imprecision
Dilating probabilities
Good’s principle and dilation
Conclusion
Coda: blinded by omniscience
Notes
References
32 Bounded rationality as the cognitive basis for evolutionary economics
Innovation, continuing unpredictable change, and bounded rationality
Routines
Deliberating, problem solving, choosing
Innovation and the advance of know-how
A brief summing up
Notes
References
33 Beyond “bounded rationality”: Behaviours and learning in complex evolving worlds
Introduction
Cognitive categories and problem solving
Framing and social embeddedness
From individuals to organizations
Modelling routines, memory and learning
Conclusion
Acknowledgements
Notes
References
34 Bounded rationality and organizational decision making
Introduction
Are managers rational?
Rationality in organizations
Rationality, psychology, economics
Bounded rationality and problem solving
The dual process account of reasoning
Organizations and routines
Routinized and not routinized behavior
Further evolutions of the notion of organizational routine
Empirical evidence: switching from routinization to exploration
Creativity and innovation
Conclusion
Notes
References
35 Attention and organizations
Bounded rationality, attention, and organizations: the Carnegie perspective
Attention at work: organizational mechanisms
The adaptive value of (in)attention
Inattention: from the economist’s point of view
Open questions
References
36 The bounded rationality of groups and teams
Bounded rationality as an eye-opener: the case of hidden profiles
Which strategy should groups use to solve hidden-profile tasks?
Peculiar information environments trigger the use of sub-optimal strategies
Bounded rationality as a research program and paradigm for group research
Group adaptivity
As-if models vs. process models
Conclusion
References
37 Cognitive biases and debiasing in intelligence analysis
Introduction
Intelligence analysis
Cognitive biases in intelligence analysis
Debiasing strategies
Psychologically informed interventions
Conclusion
Acknowledgments
References
39 An alternative behavioural public policy
Introduction
Addressing internalities
The view from nowhere
To reciprocate, to flourish
Budging
Conclusion
References
40 Against nudging: Simon-inspired behavioral law and economics founded on ecological rationality
Introduction
Expert advice and political uses of scientific claims
Ecological rationality
Public policy
Heterogeneity of beliefs and behavior as a public good
Heterogeneity forgone: costs and risks of nudging
Beyond “as-if” to policy in a profoundly uncertain world
The authoritarian turn
A Simon-inspired alternative
Against nudging
Notes
References
41 Bounded rationality in political science
Bounded rationality’s origins and principles
Bounded rationality’s influence on political science
An institutional bridge between the individual and organizations
Coming to prominence: bounded rationality and theories of the policy process
The future of bounded rationality in political science: bridging organizational and individual choice
Notes
References
42 Layering, expanding, and visualizing: Lessons learned from three “process boosts” in action
Introduction
Framing the decision context: gaining focus for a rural regeneration project in a new World Heritage Site
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology boost
Expanding the set of relevant objectives: the case of an Educational Foundation for underprivileged children in Hungary
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology approach
Visualizing preferences: how to support value functions’ elicitation in decision making
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology boost
Conclusion
Notes
References
43 Cognitive and affective consequences of information and choice overload
Introduction
Information and choice overload: a theoretical background
Definition of information and choice overload
Processes underlying the information-overload phenomenon
Empirical evidence: effect of the provision of information and choice on the decision-making process and the outcomes
Information processing and usage
Motivation for choosing and consumption
Decision accuracy and quality
Feelings and subjective states
Conclusion
Note
References
44 How much choice is “good enough”?: Moderators of information and choice overload
Introduction
Context and choice environment
Perceptual characteristics of the information presented
Choice set complexity, decision accountability, and the presence of a brand
Physical arrangement of assortment and option organization
Context specificity
Individual characteristics of the decision-maker
Decision goal
Knowledge and experience
Preference uncertainty and assessment orientation
Positive affect
Decision-making tendencies
Choosing for others versus oneself
Gender
Age
Cultural background
Conclusion
References
Part VI Cognitive organization
34 Bounded rationality and organizational decision making
Introduction
Are managers rational?
Rationality in organizations
Rationality, psychology, economics
Bounded rationality and problem solving
The dual process account of reasoning
Organizations and routines
Routinized and not routinized behavior
Further evolutions of the notion of organizational routine
Empirical evidence: switching from routinization to exploration
Creativity and innovation
Conclusion
Notes
References
35 Attention and organizations
Bounded rationality, attention, and organizations: the Carnegie perspective
Attention at work: organizational mechanisms
The adaptive value of (in)attention
Inattention: from the economist’s point of view
Open questions
References
36 The bounded rationality of groups and teams
Bounded rationality as an eye-opener: the case of hidden profiles
Which strategy should groups use to solve hidden-profile tasks?
Peculiar information environments trigger the use of sub-optimal strategies
Bounded rationality as a research program and paradigm for group research
Group adaptivity
As-if models vs. process models
Conclusion
References
37 Cognitive biases and debiasing in intelligence analysis
Introduction
Intelligence analysis
Cognitive biases in intelligence analysis
Debiasing strategies
Psychologically informed interventions
Conclusion
Acknowledgments
References
Part VII Behavioral public policies
38 “Better off, as judged by themselves”: Bounded rationality and nudging
Acknowledgments
References
39 An alternative behavioural public policy
Introduction
Addressing internalities
The view from nowhere
To reciprocate, to flourish
Budging
Conclusion
References
40 Against nudging: Simon-inspired behavioral law and economics founded on ecological rationality
Introduction
Expert advice and political uses of scientific claims
Ecological rationality
Public policy
Heterogeneity of beliefs and behavior as a public good
Heterogeneity forgone: costs and risks of nudging
Beyond “as-if” to policy in a profoundly uncertain world
The authoritarian turn
A Simon-inspired alternative
Against nudging
Notes
References
41 Bounded rationality in political science
Bounded rationality’s origins and principles
Bounded rationality’s influence on political science
An institutional bridge between the individual and organizations
Coming to prominence: bounded rationality and theories of the policy process
The future of bounded rationality in political science: bridging organizational and individual choice
Notes
References
42 Layering, expanding, and visualizing: Lessons learned from three “process boosts” in action
Introduction
Framing the decision context: gaining focus for a rural regeneration project in a new World Heritage Site
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology boost
Expanding the set of relevant objectives: the case of an Educational Foundation for underprivileged children in Hungary
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology approach
Visualizing preferences: how to support value functions’ elicitation in decision making
The cognitive challenge and the context of the intervention
Proposed solutions
Results and impacts of the multi-methodology boost
Conclusion
Notes
References
43 Cognitive and affective consequences of information and choice overload
Introduction
Information and choice overload: a theoretical background
Definition of information and choice overload
Processes underlying the information-overload phenomenon
Empirical evidence: effect of the provision of information and choice on the decision-making process and the outcomes
Information processing and usage
Motivation for choosing and consumption
Decision accuracy and quality
Feelings and subjective states
Conclusion
Note
References
44 How much choice is “good enough”?: Moderators of information and choice overload
Introduction
Context and choice environment
Perceptual characteristics of the information presented
Choice set complexity, decision accountability, and the presence of a brand
Physical arrangement of assortment and option organization
Context specificity
Individual characteristics of the decision-maker
Decision goal
Knowledge and experience
Preference uncertainty and assessment orientation
Positive affect
Decision-making tendencies
Choosing for others versus oneself
Gender
Age
Cultural background
Conclusion
References
Index