Over the past decades psychological theories have made significant headway into economics, culminating in the 2002 (partially) and 2017 Nobel prizes awarded for work in the field of Behavioral Economics. Many of the insights imported from psychology into economics share a common trait: the presumption that decision makers use shortcuts that lead to deviations from rational behaviour (the Heuristics-and-Biases program). Many economists seem unaware that this viewpoint has long been contested in cognitive psychology. Proponents of an alternative program (the Ecological-Rationality (...) program) argue that heuristics need not be irrational, particularly when judged relative to characteristics of the environment. We sketch out the historical context of the antagonism between these two research programs and then review more recent work in the Ecological-Rationality tradition. While the heuristics-and-biases program is now well-established in (mainstream neo-classical) economics via Behavioral Economics, we show there is considerable scope for the Ecological-Rationality program to interact with economics. In fact, we argue that there are many existing, yet overlooked, bridges between the two, based on independently derived research in economics that can be construed as being aligned with the tradition of the Ecological-Rationality program. We close the paper with a discussion of the open challenges and difficulties of integrating the Ecological Rationality program with economics. (shrink)

I elaborate on Quilty-Dunn et al.'s integration of the language-of-thought hypothesis in social reasoning by outlining two discrepancies between the experimental paradigms referred to by the authors and the social world: Self-referential projection and deliberate thinking in experiments. Robust tests of the hypothesis in social reasoning should include observational, natural, and cross-cultural approaches.

In this paper we contrast bounded and ecological rationality with a proposed alternative, generative rationality. Ecological approaches to rationality build on the idea of humans as “intuitive statisticians” while we argue for a more generative conception of humans as “probing organisms.” We first highlight how ecological rationality’s focus on cues and statistics is problematic for two reasons: the problem of cue salience, and the problem of cue uncertainty. We highlight these problems by revisiting the statistical and cue-based logic that underlies (...) ecological rationality, which originate from the misapplication of concepts in psychophysics. We then work through the most popular experimental task in the ecological rationality literature—the city size task—to illustrate how psychophysical assumptions have informally been linked to ecological rationality. After highlighting these problems, we contrast ecological rationality with a proposed alternative, generative rationality. Generative rationality builds on biology—in contrast to ecological rationality’s focus on statistics. We argue that in uncertain environments cues are rarely given or available for statistical processing. Therefore we focus on the psychogenesis of awareness rather than psychophysics of cues. For any agent or organism, environments “teem” with indefinite cues, meanings and potential objects, the salience or relevance of which is scarcely obvious based on their statistical or physical properties. We focus on organism-specificity and the organism-directed probing that shapes awareness and perception. Cues in teeming environments are noticed when they serve as cues-for-something, requiring what might be called a “cue-to-clue” transformation. In this sense, awareness toward a cue or cues is actively “grown.” We thus argue that perception might more productively be seen as the presentation of cues and objects rather than their representation. This generative approach not only applies to relatively mundane organism interactions with their environments—as well as organism-object relationships and their embodied nature—but also has significant implications for understanding the emergence of novelty in economic settings. We conclude with a discussion of how our arguments link with—but modify—Herbert Simon’s popular “scissors” metaphor, as it applies to bounded rationality and its implications for decision making in uncertain, teeming environments. (shrink)