And Bounded Rationality
A personal history of decision making advice.
Moral algebra (1772) and bonded rationality (1958) are examples of decision making advice. Since 2010, my blogs have been my contributions to decision making advice giving. This blog is a partial review of some decision advice I have recorded about our ability to engage in rational, meaningful decision making, including my own.
Benjamin Franklin in 1772, gave his famous decision advice to a friend and called it Moral Algebra. This became known as the “pros and cons strategy”, although Franklin included some techniques of personally weighing and balancing the pros and cons, thus Moral Algebra. Take the choice with the most pros. It may not have been the first decision advice, but it is one of the most famous early ones.
In 1958, Herbert Simon won the Nobel Prize for his concept of bounded rationality: the idea that when individuals make decisions, their rationality is limited by the available information, the tractability of the decision problem, the cognitive limitations of their minds, and the time available to make the decision. Decision-makers in this view act as “satisfiers” seeking a satisfactory solution rather than an optimal one.
One of the biggest lessons learned over these years is about the power of unconscious thinking. Willis Harman (1998) pointed out that the unconscious mind influences our decisions and can be considered a gold mind or a rubbish heap. In the next 20 years several popular books have tried to explain how to make “somewhat rational decisions”.
To name just two. In his 2006 book The Happiness Hypothesis, Jonathan Haidt came up with this metaphor image as he marveled at his weakness of will. I was a rider on the back of an elephant. The rider is Haidt’s rational mind and the elephant is his emotional mind. He says the rider is an advisor or servant, not a king, president or charioteer with a firm grip on the reins. The rider is conscious, controlled thought. The elephant is everything else. In Haidt’s metaphor the rider can’t just decide to change and then ask the elephant to go along with the program. Lasting change can come only by retraining the elephant, and that’s hard to do. The Buddha explains: The mind is a wild elephant.
Thinking Fast and Slow, 2011 by David Kahneman is the most recent book, and maybe the current standard bearer. Kahneman won the Nobel Prize in 2002, changed popular theory and made it clear that human decision making is not, and probably cannot be, totally rational. Hesummarized current thinking about thinking by identifying two types: System 1(fast, automatic, intuitive) and System 2 (slow, effortful, rational). Both System 1 and System 2 are subject to cognitive biases. So, there you have it: two imperfect systems for making judgments and decisions. How do we improve these? What Kahneman suggests is toget better acquainted with our cognitive biases.I plan to make that a major objective of future blogs.
Decision makers will make better decisions when they expect their decisions to be judged by how they are made, not only by how they turn out. David Kahneman