People don’t always seem to act in their best interests. Does this make us fundamentally irrational, or are we making rational decisions based on bad information? This isn’t a new question. In this article, journalist and UCL PALS MSc student Darko Stojilović explores the literary and scientific history of theories of Rationality. It’s in your best interest to read on.
Illustration by Srđa Dragović
By Darko Stojilović
Article originally published in Elements magazine,
Center for the Promotion of Science, Serbia
22 July 2021
Are People Rational?
In the middle of the 19th century, the struggle for human rationality took place on the soil of the Russian Empire. In 1862, Ivan Turgenev published the first modern novel in Russian literature titled Fathers and Children, in which he describes the gap between three groups in Russian society at that time. On the one hand, there are Slavophiles who advocate for the preservation of traditional values and ideas, and on the other, progressive liberals who look up to ideas from the West. Particularly interesting is the third group of people that Turgenev illustrates in his novel—nihilists who reject authority and traditional moral principles. Thus, the protagonist Bazarov rejects not only existing principles and norms, but rejects absolutely everything, and bases his actions solely on what is useful for him.
A year later, in 1863, as a response to Turgenev, Nikolai Chernyshevsky published his novel What Is to Be Done?, which became the backbone of the Russian nihilist movement. The characters in the novel are rational egoists who, like Bazarov, are guided solely by the calculation of what is in their best interest, with the assumption that it also leads to the betterment of the people around them. At the core of the idea of rational egoism is that people are predestined to act in their own interest, that is, they are unable to act against themselves. This assumption about a fundamentally rational man implies that it is possible to create a society in which all people will be guided by reason and make decisions in such a way as to maximise their own interest, and therefore the interest of society. It can be said that rational egoism is a proto-theory of rationality in both descriptive and normative sense. In the descriptive, since Chernyshevsky assumes that people really are rational egoists, and in the normative, because at the same time he implies that utility is a measure of rationality.
Finally, Fyodor Dostoevsky joined the philosophical and literary debate by publishing Notes from Underground in 1864 as a response to What is to Be Done?. He criticises the determinism of rational egoism, which implies that people are conditioned by their nature to behave completely rationally and in their own best interest. He believes that in this way no room is left for free will. Dostoevsky argues that the idea of rational egoism has no basis in reality, since people value something else more—freedom. People are not motivated solely by what is beneficial to them, they are ready to work even against their interest if it allows them to act freely. Even if we lived in a perfect world, men will want to violate it so that they can express their free will.
Rational egoism implies that people know (or are able to calculate) which decision is the most rational under the given circumstances and among different alternatives. Dostoevsky, on the other hand, asks the question—even if that is possible—Where is the pleasure in looking at [mathematical] tables?
From perfect to bounded rationality
A century later, the struggle for human rationality continues in the same manner, but this time it is led by scientists, not writers. The dominant model of human rationality becomes Homo Economicus, according to which man is a perfectly rational being. The basic idea is that, based on the available information, people make decisions in order to achieve the greatest possible benefit. In other words, people are rational egoists who possess knowledge about all relevant aspects of the environment they are in, have stable preference systems (i.e. they know what they want and have a clear hierarchy of desires), and can calculate the utility of different alternatives, i.e. compare the values of potential profit and loss, and thus reach the most rational decision. These principles are embodied in the theory of rational choice, which has become extremely popular among economists. One of the basic assumptions of the theory contained the assumption that Chernyshevsky also wrote about—that the rational action of individuals will also bring the greatest benefit to society. Economists are not concerned with what the cognitive process of decision-making looks like, but rather use these theoretical models to try and predict behaviour. This theory is also normative in the sense that if its principles are violated, that will mean that we did not make a rational decision, that is, that we did not choose the “most beneficial” option.
Herbert Simon, still one of the most cited scientists in the social sciences, enters the debate with an argument that the rationality models devised by economists must also include findings from another discipline that also examined this problem—psychology. Namely, man has specific limitations when it comes to cognitive functioning and is not able to perform complex calculations when making decisions as assumed by the Homo Economicus model. Rational choice theory further assumes that a person can assign a value of expected gain to each possible alternative, which would imply that he can predict each potential outcome. Back in the fifties of the last century, Simon rejected these assumptions as unfounded, before there were empirical findings that confirmed it. He proposed a different conceptualization of human rationality that would take into account the limited resources of the human cognitive system and the limited time in which a decision needs to be made. His theory of bounded rationality predicts that people do not make optimal decisions by choosing the alternative that will bring them the greatest possible benefit, but instead opt for the option that is satisfactory in given circumstances. Simon illustrates his point using the analogy of scissors, where one blade represents the cognitive limitations and the other the structure of the environment in which the decision is made—by using the familiarity of the structure of the environment, people manage to compensate for the shortcomings of their cognitive system.
Predictable Irrationality
Empirical confirmation of human irrationality did not take long. At the end of the 1960s, psychologists Daniel Kahneman and Amos Tversky embarked on a fruitful journey by starting a series of experimental studies and by showing that people make systematic mistakes when making decisions. They succeed in describing cognitive biases that prevent rational thought. People making mistakes in reasoning is nothing new—the new insight was that there is a systematic deviation from normative rationality, that is, people making the same mistakes. Man is not only irrational, but predictably irrational.
Let’s consider the framing effect on an example created and published by Kahneman and Tversky exactly 40 years ago called The Asian Disease Problem.
Imagine there is a disease that is expected to kill 600 people, and your task is to choose one of two Programs.
Positive frame (emphasising gain):
- A is adopted, 200 people will be saved (certain option)
- If Program B is adopted, there is 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved (risky option)
Negative frame (emphasising loss):
- If Program C is adopted 400 people will die (certain option)
- If Program D is adopted there is 1/3 probability that nobody will die, and 2/3 probability that 600 people will die (risky option)
Programs A and C, or programs B and D are numerically equivalent. According to the theory of rational choice, the way of presenting information, i.e. different frames should not affect the choice. People should make the same choice in both cases. However, the findings show that in the first described situation (positive frame), people usually choose a certain option (program A), while in the second (negative frame) they choose the risky variant (program D). In other words, people violate the principles of normative rationality.
The Return of Simon’s Scissors
Still, some researchers argued that there is an additional difference between options A and B, as well as between C and D, in that the risky option is fully specified and the certain option is not. Namely, in option A it is not emphasised that, in addition to the fact that 400 people will survive, 200 people will also die. The same applies to option C. This will have no effect on decision-making according to rational choice theory since the ratio of gains and losses is preserved. However, in reality, people notice when some information is missing and use it as an implicit recommendation of what to choose. When the information is fully specified (e.g. 400 people will survive and 200 people will die), the frame effect disappears. However, it should be pointed out that there are solid empirical findings that the frame effect is stable in some other examples.
Illustration by Srđa Dragović
Consequently, German psychologist Gerd Gigerenzer postulates the theory of ecological rationality, according to which people do not only use their cognitive system, but rely on its interaction with information from the environment. This descriptive theory (as it relates to how people actually make decisions) draws on Herbert Simon’s idea of bounded rationality and, more specifically, on the metaphor of scissors, one blade representing cognition and the other the environment. Rational behaviour depends on the environment and cognitive system, not on logical consistency. For example, the way information is presented should be an important factor in decision-making. People do not rely only on the information given to them in the task, but also (intuitively) use other information from the environment. People are not always guided only by the laws dictated by normative theory, but often intuitively search for good enough solutions, i.e. they use heuristics—a concept introduced into psychology by Kahneman and Tversky.
How do baseball players catch the ball? Proponents of rational choice theory, as well as some scientists, such as Richard Dawkins, used to argue that they use complex, unconscious mental algorithms that resemble mathematical operations. However, experimental research has shown that baseball players use a very simple heuristic—they fixate their gaze on the ball and run toward it while “adjusting” their speed so that the angle at which they look at the ball is constant. Using this heuristic, players ignore a variety of information from the environment, such as wind resistance and direction, initial ball distance, etc. while still managing to catch the ball.
In the theory of ecological rationality proposed by Gigerencer, there is a model of man who is Homo Heuristicus. Namely, an idea that people have a biased mind that ignores part of the information available to them, which enables them to find their way in an uncertain world where it is not possible to calculate the best decision in a given situation. Many other findings have shown that simple heuristics can be more effective than complex procedures, primarily because they use evolutionarily developed mental abilities and the structure of the environment. Heuristics are not necessarily good or bad, but their accuracy depends on the environment. Heuristic rationality is therefore ecological, not logical.
In the long history of dealing with human rationality, two different lines of approach can be distinguished. Mathematicians and economists most often tried to establish universal norms for rational behaviour that would be based on logic, mathematics and other precisely ordered systems. On the other hand, philosophers, psychologists and writers, who dealt more “intimately” with the human condition, tried to describe human rationality as it is. Although it has been established that people do not respect the norms assigned to them, the theory of rational choice is still popular in some scientific approaches, which can be problematic in cases when human thinking markedly differs from such an idealised image of a perfectly rational man. Even if a person had the ability to think perfectly rationally, the question arises, “Where is the pleasure in looking at tables?”, because, as Dostoevsky beautifully illustrated it more than 150 years ago:
“Man, everywhere and at all times, whoever he may be, prefers to act as he wants and not in the least as his reason and benefit dictate. And one may choose what is contrary to one’s own interests, and sometimes one positively ought (that is my idea). One’s own free unfettered choice, one’s own caprice, however wild it may be, one’s own fancy worked up at times to madness—is the overlooked “most beneficial benefit” which comes under no classification and which continually shatters all systems and theories and sends them straight to hell.”
