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by feoren
911 days ago
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> He's saying they're irrational. And he's right. No, he's not right. Humans only seem irrational when you myopically narrow your focus to one or two axes. This is something "smart" people do all the time: they're smart in one way, so everyone who acts in any way counter to what looks optimal from that narrow, simplified model is acting "irrationally". Economists will call humans irrational, but it's actually their over-simplified models that suck. Sid Meyer will call his players irrational, but it's actually his (originally) lame combat system that sucks. Rich MBAs will call lifelong employees irrational for not starting their own businesses, but they're ignoring a thousand factors that they took for granted. The people they are denigrating are incorporating more axes, more information, more context than their silly little models are. There's a story I wish I could find about a young boy in India trying to answer his dad's math problems. His dad asks him questions like "A man wants 5 mangoes from a shopkeeper who is selling them for $4 each. How much money will he spend?" and gets increasingly exasperated that his child can't answer. But we see the child's inner thoughts, with things like "why would he spend $4 at this shopkeeper when they usually cost $2? Can't he just walk to a different shop and get them there? And what is he going to do with FIVE mangoes? He won't be able to use them all before they spoil!" etc. etc. Sid Meyer is the dad assuming his players are stupid (sorry, "irrational", meaning: stupid, losers, dumb, idiots, morons). They're not. |
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Paper itself: https://www.nowpublishers.com/article/OpenAccessDownload/RBE...
Abstract: "Behavioral economics began with the intention of eliminating the psychological blind spot in rational choice theory and ended up portraying psychology as the study of irrationality. In its portrayal, people have systematic cognitive biases that are not only as persistent as visual illusions but also costly in real life—meaning that governmental paternalism is called upon to steer people with the help of “nudges.” These biases have since attained the status of truisms. In contrast, I show that such a view of human nature is tainted by a “bias bias,” the tendency to spot biases even when there are none. This may occur by failing to notice when small sample statistics differ from large sample statistics, mistaking people’s random error for systematic error, or confusing intelligent inferences with logical errors. Unknown to most economists, much of psychological research reveals a different portrayal, where people appear to have largely fine-tuned intuitions about chance, frequency, and framing. A systematic review of the literature shows little evidence that the alleged biases are potentially costly in terms of less health, wealth, or happiness. Getting rid of the bias bias is a precondition for psychology to play a positive role in economics."