Communication and content presents a comprehensive and foundational account of meaning based on new versions of situation theory and game theory. The literal and implied meanings of an utterance are derived from first principles assuming little more than the partial rationality of interacting agents. New analyses of a number of diverse phenomena – a wide notion of ambiguity and content encompassing phonetics, syntax, semantics, pragmatics, and beyond, vagueness, convention and conventional meaning, indeterminacy, universality, the role of truth in communication, semantic (...) change, translation, Frege’s puzzle of informative identities – are developed. Communication, speaker meaning, and reference are defined. Frege’s context and compositional principles are generalized and reconciled in a fixed-point principle, and a detailed critique of Grice, several aspects of Lewis, and some aspects of the Romantic conception of meaning are offered. Connections with other branches of linguistics, especially psycholinguistics, sociolinguistics, historical linguistics, and natural language processing, are explored. -/- The book will be of interest to scholars in philosophy, linguistics, artificial intelligence, and cognitive science. It should also interest readers in related fields like literary and cultural theory and the social sciences. (shrink)

Interactions between an intelligent software agent and a human user are ubiquitous in everyday situations such as access to information, entertainment, and purchases. In such interactions, the ISA mediates the user’s access to the content, or controls some other aspect of the user experience, and is not designed to be neutral about outcomes of user choices. Like human users, ISAs are driven by goals, make autonomous decisions, and can learn from experience. Using ideas from bounded rationality, we frame these interactions (...) as instances of an ISA whose reward depends on actions performed by the user. Such agents benefit by steering the user’s behaviour towards outcomes that maximise the ISA’s utility, which may or may not be aligned with that of the user. Video games, news recommendation aggregation engines, and fitness trackers can all be instances of this general case. Our analysis facilitates distinguishing various subcases of interaction, as well as second-order effects that might include the possibility for adaptive interfaces to induce behavioural addiction, and/or change in user belief. We present these types of interaction within a conceptual framework, and review current examples of persuasive technologies and the issues that arise from their use. We argue that the nature of the feedback commonly used by learning agents to update their models and subsequent decisions could steer the behaviour of human users away from what benefits them, and in a direction that can undermine autonomy and cause further disparity between actions and goals as exemplified by addictive and compulsive behaviour. We discuss some of the ethical, social and legal implications of this technology and argue that it can sometimes exploit and reinforce weaknesses in human beings. (shrink)

This article takes off from Johan van Benthem’s ruminations on the interface between logic and cognitive science in his position paper “Logic and reasoning: Do the facts matter?”. When trying to answer Van Benthem’s question whether logic can be fruitfully combined with psychological experiments, this article focuses on a specific domain of reasoning, namely higher-order social cognition, including attributions such as “Bob knows that Alice knows that he wrote a novel under pseudonym”. For intelligent interaction, it is important that the (...) participants recursively model the mental states of other agents. Otherwise, an international negotiation may fail, even when it has potential for a win-win solution, and in a time-critical rescue mission, a software agent may depend on a teammate’s action that never materializes. First a survey is presented of past and current research on higher-order social cognition, from the various viewpoints of logic, artificial intelligence, and psychology. Do people actually reason about each other’s knowledge in the way proscribed by epistemic logic? And if not, how can logic and cognitive science productively work together to construct more realistic models of human reasoning about other minds? The paper ends with a delineation of possible avenues for future research, aiming to provide a better understanding of higher-order social reasoning. The methodology is based on a combination of experimental research, logic, computational cognitive models, and agent-based evolutionary models. (shrink)

The independence of irrelevant alternatives is a popular and important axiom of decision theory. It states, roughly, that one’s choice from a set of options should not be influenced by the addition or removal of further, unchosen options. In recent debates, a number of authors have given putative counterexamples to it, involving intuitively rational agents who violate IIA. Generally speaking, however, these counterexamples do not tend to move IIA’s proponents. Their strategy tends to be to individuate the options that the (...) agent faces differently, so that the case no longer counts as a violation of IIA. In this paper, we examine whether this strategy succeeds. We argue that the ways of individuating options required to save IIA from the most problematic counterexamples—in particular, cases where agents violate IIA due to nonconsequentialist moral beliefs—do so only at the expense of severely compromising its central function within decision theory. (shrink)

Three very prominent arguments for atheism are (1) the argument from sub-optimality, (2) the problem of no best world, and (3) the evidential argument from gratuitous evil. To date, it has not sufficiently been appreciated that several important criticisms of these arguments have all relied on a shared strategy. Although the details vary, the core of this strategy is to concede that God either cannot or need not achieve the best outcome in the relevant choice situation, but to insist that (...) God must and can achieve an outcome that is good enough. In short, this strategy invokes divine satisficing in response to these arguments for atheism. (The widespread use of this strategy may have gone unnoticed because the appeal to divine satisficing is usually implicit.) In sections 1–3, the three arguments for atheism will be set out, and it will be shown that the relevant replies all employ this shared strategy. Section 4 will show that those who invoke divine satisficing have failed to establish that this is a coherent notion. Accordingly, these replies to three important arguments for atheism are, at present, incomplete. (shrink)

To clarify and illuminate the place of probability in science Ellery Eells and James H. Fetzer have brought together some of the most distinguished philosophers ...

We develop an analysis of discourse anaphora—the relationship between a pronoun and an antecedent earlier in the discourse —using games of partial information. The analysis is extended to include information from a variety of different sources, including lexical semantics, contrastive stress, grammatical relations, and decision theoretic aspects of the context.

Why should moral philosophers, moral psychologists, and machine ethicists care about computational complexity? Debates on whether artificial intelligence (AI) can or should be used to solve problems in ethical domains have mainly been driven by what AI can or cannot do in terms of human capacities. In this paper, we tackle the problem from the other end by exploring what kind of moral machines are possible based on what computational systems can or cannot do. To do so, we analyze normative (...) ethics through the lens of computational complexity. First, we introduce computational complexity for the uninitiated reader and discuss how the complexity of ethical problems can be framed within Marr’s three levels of analysis. We then study a range of ethical problems based on consequentialism, deontology, and virtue ethics, with the aim of elucidating the complexity associated with the problems themselves (e.g., due to combinatorics, uncertainty, strategic dynamics), the computational methods employed (e.g., probability, logic, learning), and the available resources (e.g., time, knowledge, learning). The results indicate that most problems the normative frameworks pose lead to tractability issues in every category analyzed. Our investigation also provides several insights about the computational nature of normative ethics, including the differences between rule- and outcome-based moral strategies, and the implementation-variance with regard to moral resources. We then discuss the consequences complexity results have for the prospect of moral machines in virtue of the trade-off between optimality and efficiency. Finally, we elucidate how computational complexity can be used to inform both philosophical and cognitive-psychological research on human morality by advancing the moral tractability thesis. (shrink)

Why would decision makers adopt heuristics, priors, or in short “habits” that prevent them from optimally using pertinent information—even when such information is freely-available? One answer, Herbert Simon’s “procedural rationality” regards the question invalid: DMs do not, and in fact cannot, process information in an optimal fashion. For Simon, habits are the primitives, where humans are ready to replace them only when they no longer sustain a pregiven “satisficing” goal. An alternative answer, Daniel Kahneman’s “mental economy” regards the question valid: (...) DMs make decisions based on optimization. Kahneman understands optimization not differently from the standard economist’s “bounded rationality.” This might surprise some researchers given that the early Kahneman, along with Tversky, have uncovered biases that appear to suggest that choices depart greatly from rational choices. However, once we consider cognitive cost as part of the constraints, such biases turn out to be occasional failures of habits that are otherwise optimal on average. They are optimal as they save us the cognitive cost of case-by-case deliberation. While Kahneman’s bounded rationality situates him in the neoclassical economics camp, Simon’s procedural rationality echoes Bourdieu’s “habitus” camp. To abridge the fault line of the two camps, this paper proposes a “two problem areas hypothesis.” Along the neoclassical camp, habits satisfy wellbeing, what this paper calls “substantive satisfaction.” Along the Bourdieu camp, habits satisfy belonging, love, and bonding with one’s environment, what this paper calls “transcendental satisfaction.”. (shrink)

In this article, we present a contextually embedded choice theory. Using concepts and tools of poset mathematics, we show how to include in rational choice theory cultural and social effects. Specifically, we define some choice superstructures, seen as choice set transformations imposed by cultural and social norms. As we shall argue, these transformations can be of help to explain choice behavior within different contexts. Moreover, we show that, once choice superstructures are taken into account, some well-known results about maximizing and (...) optimizing behavior are easily confirmed and some insights on intransitive choices may be phased out. (shrink)

Framing effects occur when different descriptions of the same decision problem give rise to divergent decisions. They can be seen as a violation of the decisiontheoretic version of the principle of extensionality (PE). The PE in logic means that two logically equivalent sentences can be substituted salva veritate. We explore what this notion of extensionality becomes in decision contexts. Violations of extensionality may have rational grounds. Based on some ideas proposed by the psychologist Craig McKenzie and colleagues, we contend that (...) framing effects are justified when the selection of one particular frame conveys choice relevant information. We first discuss this idea from a philosophical point of view, and proceed next to formalize it first in the context of the Bolker–Jeffrey decision theory. Finally, we extend the previous analysis to non-expected utility theories using the Biseparable Preference model introduced by Ghirardato and Marinacci (2001) and therefore show that the analysis is independent of the assumptions of Bayesian decision theory. (shrink)

Researchers from across the social sciences have found consistent deviations from the predictions of the canonical model of self-interest in hundreds of experiments from around the world. This research, however, cannot determine whether the uniformity results from universal patterns of human behavior or from the limited cultural variation available among the university students used in virtually all prior experimental work. To address this, we undertook a cross-cultural study of behavior in ultimatum, public goods, and dictator games in a range of (...) small-scale societies exhibiting a wide variety of economic and cultural conditions. We found, first, that the canonical model – based on self-interest – fails in all of the societies studied. Second, our data reveal substantially more behavioral variability across social groups than has been found in previous research. Third, group-level differences in economic organization and the structure of social interactions explain a substantial portion of the behavioral variation across societies: the higher the degree of market integration and the higher the payoffs to cooperation in everyday life, the greater the level of prosociality expressed in experimental games. Fourth, the available individual-level economic and demographic variables do not consistently explain game behavior, either within or across groups. Fifth, in many cases experimental play appears to reflect the common interactional patterns of everyday life. Key Words: altruism; cooperation; cross-cultural research; experimental economics; game theory; ultimatum game; public goods game; self-interest. (shrink)

I argue that considerations about computational complexity show that all finite agents need characteristics like those that have been called epistemic virtues. The necessity of these virtues follows in part from the nonexistence of shortcuts, or efficient ways of finding shortcuts, to cognitively expensive routines. It follows that agents must possess the capacities – metavirtues –of developing in advance the cognitive virtues they will need when time and memory are at a premium.

One might think that, once we know something is computable, how efficiently it can be computed is a practical question with little further philosophical importance. In this essay, I offer a detailed case that one would be wrong. In particular, I argue that computational complexity theory---the field that studies the resources needed to solve computational problems---leads to new perspectives on the nature of mathematical knowledge, the strong AI debate, computationalism, the problem of logical omniscience, Hume's problem of induction and Goodman's (...) grue riddle, the foundations of quantum mechanics, economic rationality, closed timelike curves, and several other topics of philosophical interest. I end by discussing aspects of complexity theory itself that could benefit from philosophical analysis. (shrink)

The conceptual foundations, features, and scope of the notion of rationality are increasingly being affected by developments in embodied cognitive science. This article starts from the idea of embodied rationality, and aims to develop a frame in which a debate with the classical, possibly bounded, notion of rationality-as-consistency can take place. To this end, I develop a game theoretic description of a real time interaction setup in which participants' behaviors can be used to compare the enactive approach, which underlies embodied (...) rationality, with game theoretic approaches to human interaction. The Perceptual Crossing Paradigm is a minimal interaction interface where two participants each control an avatar on a shared virtual line, and are tasked with cooperatively finding each other among distractor objects. It is well known that the best performance on this task is obtained when both participants let their movements coordinate with the objects they encounter, which they do without any prior knowledge of efficient interaction strategies in the system. A game theoretic model of this paradigm shows that this task can be described as an Assurance game, which allows for comparing game theoretical approaches and the enactive approach on two main fronts. First, accounting for the ability of participants to interactively solve the Assurance game; second, accounting for the evolution of choice landscapes resulting from evolving normative realms in the task. Similarly to the series of paradoxes which have fueled debates in economics in the past century, this analysis aims to serve as an interpretation testbed which can fuel the current debate on rationality. (shrink)

Classical models of decision making deal fairly well with uncertainty, where settings are well-structured in terms of goals, alternatives, and consequences. Conversely, the typical ill-structured nature of strategy choices remains a challenge for extant models. Such cases can hardly build on the past, and their novelty makes the prediction of consequences a very difficult and poorly robust task. The weakness of the classical expected utility model in representing such problems has not been adequately solved by recent extensions. In this paper (...) we offer an explanatory coherence model for decision making in ill-structured problems. We model alternatives as sets of concurrent causal explanations of reality that act as justifications for action. According to these premises, choice is based on an evaluation of the internal coherence and the consistency of competing explanations of the available evidence. This model is psychologically grounded on causal inference and builds on the connectionist tradition of explanatory coherence. To illustrate the model, we consider the decision of investing in a new technology and we discuss how changes in the structure of alternatives may impact on the solution. We show how the final choice depends on collecting the relevant evidence, making the suitable hypotheses, and drawing the consistent causal explanations linking the two. (shrink)

Enthymemes are traditionally defined as arguments in which some elements are left unstated. It is an empirical fact that enthymemes are both enormously frequent and appropriately understood in everyday argumentation. Why is it so? We outline an answer that dispenses with the so called "principle of charity", which is the standard notion underlying most works on enthymemes. In contrast, we suggest that a different force drives enthymematic argumentation—namely, parsimony, i.e. the tendency to optimize resource consumption, in light of the agent's (...) goals. On this view, the frequent use of enthymemes does not indicate sub-optimal performance of arguers, requiring appeals to charity for their redemption. On the contrary, it is seen as a highly adaptive argumentation strategy, given the need of everyday reasoners to optimize their cognitive resources. Considerations of parsimony also affect enthymeme reconstruction, i.e. the process by which the interpreter makes sense of the speaker's enthymemes. Far from being driven by any pro-social cooperative instinct, interpretative efforts are aimed at extracting valuable information at reasonable costs from available sources. Thus, there is a tension between parsimony and charity, insofar as the former is a non-social constraint for self-regulation of one's behaviour, whereas the latter implies a pro-social attitude. We will argue that some versions of charity are untenable for enthymeme interpretation, while others are compatible with the view defended here, but still require parsimony to expose the ultimate reasons upon which a presumption of fair treatment in enthymeme reconstruction is founded. (shrink)

Standard principles of rational decision assume that an option's utility is both comprehensive and accessible. These features constrain interpretations of an option's utility. This essay presents a way of understanding utility and laws of utility. It explains the relation between an option's utility and its outcome's utility and argues that an option's utility is relative to a specification of the option. Utility's relativity explains how a decision problem's framing affects an option's utility and its rationality even for an agent who (...) is cognitively perfect and lacks only empirical information. The essay rewrites standard laws of utility to accommodate relativization to propositions' specifications. The new laws are generalizations of the standard laws and yield them as special cases. (shrink)

The frame problem is the difficulty of explaining how non-magical systems think and act in ways that are adaptively sensitive to context-dependent relevance. Influenced centrally by Heideggerian phenomenology, Hubert Dreyfus has argued that the frame problem is, in part, a consequence of the assumption (made by mainstream cognitive science and artificial intelligence) that intelligent behaviour is representation-guided behaviour. Dreyfus' Heideggerian analysis suggests that the frame problem dissolves if we reject representationalism about intelligence and recognize that human agents realize the property (...) of thrownness (the property of being always already embedded in a context). I argue that this positive proposal is incomplete until we understand exactly how the properties in question may be instantiated in machines like us. So, working within a broadly Heideggerian conceptual framework, I pursue the character of a representation-shunning thrown machine. As part of this analysis, I suggest that the frame problem is, in truth, a two-headed beast. The intra-context frame problem challenges us to say how a purely mechanistic system may achieve appropriate, flexible and fluid action within a context. The inter-context frame problem challenges us to say how a purely mechanistic system may achieve appropriate, flexible and fluid action in worlds in which adaptation to new contexts is open-ended and in which the number of potential contexts is indeterminate. Drawing on the field of situated robotics, I suggest that the intra-context frame problem may be neutralized by systems of special-purpose adaptive couplings, while the inter-context frame problem may be neutralized by systems that exhibit the phenomenon of continuous reciprocal causation. I also defend the view that while continuous reciprocal causation is in conflict with representational explanation, special-purpose adaptive coupling, as well as its associated agential phenomenology, may feature representations. My proposal has been criticized recently by Dreyfus, who accuses me of propagating a cognitivist misreading of Heidegger, one that, because it maintains a role for representation, leads me seriously astray in my handling of the frame problem. I close by responding to Dreyfus' concerns. (shrink)

We present a formal analysis of Douglas Hofstadter’s concept of superrationality. We start by defining superrationally justifiable actions, and study them in symmetric games. We then model the beliefs of the players, in a way that leads them to different choices than the usual assumption of rationality by restricting the range of conceivable choices. These beliefs are captured in the formal notion of type drawn from epistemic game theory. The theory of coalgebras is used to frame type spaces and to (...) account for the existence of some of them. We find conditions that guarantee superrational outcomes. (shrink)

We consider several puzzles of bounded rationality. These include the Allais- and Ellsberg paradox, the disjunction effect, and related puzzles. We argue that the present account of quantum cognition—taking quantum probabilities rather than classical probabilities—can give a more systematic description of these puzzles than the alternate treatments in the traditional frameworks of bounded rationality. Unfortunately, the quantum probabilistic treatment does not always provide a deeper understanding and a true explanation of these puzzles. One reason is that quantum approaches introduce additional (...) parameters which possibly can be fitted to empirical data but which do not necessarily explain them. Hence, the phenomenological research has to be augmented by responding to deeper foundational issues. In this article, we make the general distinction between foundational and phenomenological research programs, explaining the foundational issue of quantum cognition from the perspective of operational realism. This framework is motivated by assuming partial Boolean algebras. They are combined into a uniform system via a mechanism preventing the simultaneous realization of perspectives. Gleason’s theorem then automatically leads to a distinction between probabilities that are defined by pure states and probabilities arising from the statistical mixture of pure states. This formal distinction relates to the conceptual distinction between risk and ignorance. Another outcome identifies quantum aspects in dynamic macro-systems using the framework of symbolic dynamics. Finally, we discuss several ideas that are useful for justifying complementarity in cognitive systems. (shrink)

In the methodology of scientific research programs (MSRP) there are important features on the problem of prediction, especially regarding novel facts. In his approach, Imre Lakatos proposed three different levels on prediction: aim, process, and assessment. Chapter 5 pays attention to the characterization of prediction in the methodology of research programs. Thus, it takes into account several features: (1) its pragmatic characterization, (2) the logical perspective as a proposition, (3) the epistemological component, (4) its role in the appraisal of research (...) programs, and (5) its place as a value for scientific research. -/- The notion of “novel facts” is highly relevant in his conception, where several aspects are involved: the directions of novel facts, the different kinds of novelty, and the transition from six possible options of “novel facts” to four choices. Thereafter, the prediction of novel facts as the criterion of appraisal is considered. On the one hand, this requires analyzing the theoretical, empirical, and heuristic possibilities of appraisal; and, on the other, whether there is an overemphasis on the role of prediction in methodology of scientific research programs. As a consequence, there is an analysis of Lakatos’ criterion of appraisal in MSRP and economics. (shrink)

Scientific pluralism is an issue at the forefront of philosophy of science. This landmark work addresses the question, Can pluralism be advanced as a general, philosophical interpretation of science?

This article proposes a cost-benefit analysis of argumentation, with the aim of highlighting the strategic considerations that govern the agent's decision to argue or not. In spite of its paramount importance, the topic of argumentative decision-making has not received substantial attention in argumentation theories so far. We offer an explanation for this lack of consideration and propose a tripartite taxonomy and detailed description of the strategic reasons considered by arguers in their decision-making: benefits, costs, and dangers. We insist that the (...) implications of acknowledging the strategic dimension of arguing are far-reaching, including promising insights on how to develop better argumentation technologies. (shrink)

An unprocessed risk is a collection of simple lotteries with a reduction-rule that describes the actual-payoff to the decision-maker as a function of realized lottery outcomes. Experiments reveal that the willingness to pay for unprocessed risks is consistently biased toward the payoff-level in the unprocessed representation. The anchoring-to-frame bias in cases of positive framing is significantly weaker than in cases of negative framing suggesting that rational negativity bias may reflect in asymmetric violations of rationality.

The dissertation criticizes two analogical applications of Darwinism to the spheres of mind and culture: the Darwinian approach to creativity and memetics. These theories rely on three basic analogies: the ontological analogy states that the basic ontological units of culture are so-called memes, which are replicators like genes; the origination analogy states that novelty in human creativity emerges in a "blind" Darwinian manner; and the explanatory units of selection analogy states that memes are "egoistic" and that they can spread independently (...) of our mind. The detailed philosophical analysis offered in the dissertation shows that these three analogies rely on either wrong or trivial statements: they provide either wrong or no new descriptions or explanations of the phenomena at hand. In Chapter One, I introduce the diverse ways, in which contemporary Darwinism is used today outside of evolutionary biology. Chapter Two explains what it means to claim that something evolves in a Darwinian manner. Chapter Three to Five address each of the three analogies separately. Darwinism applied to culture and mind, at least in the way discussed in this study, is not a dangerous idea. It leads either to wrong claims or to a re-telling in Darwinian terms of what we have already known. (shrink)

We develop a framework for modeling choice in the presence of framing effects. An extended choice function assigns a chosen element to every pair (A, f ) where A is a set of alternatives and f is a frame. A frame includes observable information that is irrelevant in the rational assessment of the alternatives, but nonetheless affects choice. We relate the new framework to the classical model of choice correspondence. Conditions are identified under which there exists either a transitive or (...) a transitive and complete binary relation R such that an alternative x is chosen in some (A, f ) iff x is R-maximal in the set A. We then demonstrate that the framework of choice correspondence misses information, which is essential to economic modeling and which is incorporated in the extended choice function. (shrink)

Why are enthymemes so frequent? Are we dumb arguers, smart rhetoricians, or parsimonious reasoners? This paper investigates systematic use of enthymemes, criticizing the application of the principle of charity to their interpretation. In contrast, I propose to analyze enthymematic argumentation in terms of parsimony, i.e. as a manifestation of the rational tendency to economize over scant resources. Consequences of this view on the current debate on enthymemes and on their rational reconstruction are discussed.

What on earth are economic theorists like me trying to accomplish? This paper discusses four dilemmas encountered by an economic theorist: The dilemma of absurd conclusions: Should we abandon a model if it produces absurd conclusions or should we regard a model as a very limited set of assumptions that will inevitably fail in some contexts? The dilemma of responding to evidence: Should our models be judged according to experimental results? The dilemma of modelless regularities: Should models provide the hypothesis (...) for testing or are they simply exercises in logic that have no use in identifying regularities? The dilemma of relevance: Do we have the right to offer advice or to make statements that are intended to influence the real world? (shrink)

I argue that considerations about computational complexity show that all finite agents need characteristics like those that have been called epistemic virtues. The necessity of these virtues follows in part from the nonexistence of shortcuts, or efficient ways of finding shortcuts, to cognitively expensive routines. It follows that agents must possess the capacities – metavirtues –of developing in advance the cognitive virtues they will need when time and memory are at a premium.

We present a model of rational behavior by which we characterize business ethical dilemmas as trade-offs between processes and consequences. As an illustration, we formulate the oil industry's business ethical dilemma as a trade-off between a socially detrimental process (emitting greenhouse gases, hence inducing a risk of climate change) and a self-interested consequence (profits). The proposed framework allows us to specify two types of strategies, differing by whether priority is given to the consequences or to the processes. We analyze and (...) illustrate these strategies at both the behavioral and the discursive levels. In particular, communication strategies raise questions about good faith in business argumentation, in the sense that business discourse may or may not be consistent with actual assumptions and/or actual behaviors. We conclude on possible drivers of more ethical business behavior. (shrink)

Research on bounded rationality has two cultures, which I call ‘idealistic’ and ‘pragmatic’. Technically, the cultures differ on whether they build models based on normative axioms or empirical facts, assume that people's goal is to optimize or to satisfice, do not or do model psychological processes, let parameters vary freely or fix them, aim at explanation or prediction and test models from one or both cultures. Each culture tells a story about people's rationality. The story of the idealistic culture is (...) frustrating, with people in principle being able to know what they should do, but in practice systematically failing to do it. This story makes one hide in books for intellectual solace or surrender to the designs of someone smarter. The story of the pragmatic culture is empowering: If people are educated to use the right tool in the right situation, they do well. (shrink)

In game-theoretic signaling models, evolution tends to favor perfectly precise signaling systems, but in the natural world communication is almost always imprecise. I argue that standard explanations for this discrepancy are only partially sufficient, and I show that communication is often ambiguous because signal senders take advantage of context sensitivity. As evidence, I make two additions to the signaling model: a cost for more complex signaling strategies and the ability to combine information in signals with independent information. Analysis and simulation (...) of the altered model shows that it leads to the predicted outcome of evolution favoring ambiguous signaling. (shrink)

The rationalization of context-based choice is usually based on the assumption that preferences are context-dependent. In this paper, we show that context-based choice can be due to the characteristics of the choice procedure applied by the individual and not to the dependence of preferences (stochastic or deterministic) on the context. Our arguments are illustrated focusing on the much-studied dominated-alternative effects.

Simon’s bounded rationality , the first scientific research program to seriously take the cognitive limitations of decision makers into account, has often been conflated with his more restricted concept of satisficing—choosing an alternative that meets or exceeds specified criteria, but that is not guaranteed to be unique or in any sense “the best.” Proponents of optimization often dismiss bounded rationality out of hand with the following “hallway syllogism” : bounded rationality “boils down to” satisficing; satisficing is “simply” a theory of (...) search for alternatives that takes into account the costs of computation. Hence, bounded rationality is “just a minor tweak” on optimal search theory. (shrink)

Simon’s notion of bounded rationality is deeply intertwined with his activity as a cognitive psychologist and founder of so-called cognitivism, a mainstream approach in cognitive psychology until the 1980s. Cognitivism, understood as ‘symbolic information processing,’ provided the first cognitive psychology foundation to bounded rationality. Has bounded rationality since then fully followed the development of cognitive psychology beyond symbolic information processing in the post-Simonian era? To answer this question, this paper focuses on Simon’s opposition during the 1990s to a new view (...) of cognition called situated cognition, which has since put into question the entire view in cognitive psychology of humans as symbolic information processors. This paper then reads the cognitivism/situated cognition debate through the lens of current bounded rationality research in economics, in order to inquire into whether it has tackled the issues in that controversy; to envisage possible new foundations for a cognitive psychology-based bounded rationality. (shrink)

Insurance is pervasive in many social settings. As a cooperative device based on risk pooling, it serves to attenuate the adverse consequences of various risks by offering policyholders coverage against the losses implied by adverse events in exchange for the payment of premiums. In the insurance industry, the concept of actuarial fairness serves to establish what could be adequate, fair premiums. Accordingly, premiums paid by policyholders should match as closely as possible their risk exposure. Such premiums are the product of (...) the probabilities of losses and the expected losses. This article presents a discussion of the fairness of actuarial fairness through three steps: defining the concept based on its formulation within the insurance industry; determining in which sense it may be about fairness; and raising some objections to the actual fairness of actuarial fairness. The necessity of a normative evaluation of actuarial fairness is justified by the influence of the concept on the current reforms of public insurance systems and the fact that it highlights the question of the repartition of the gains and burdens of social cooperation. (shrink)

Desire for flexibility suggests that the value of a choice-menu should increase with the number of options included. Complexity-aversion on the other hand may imply that the value of a menu decreases with its cardinality. We present the results of an experiment where 5 groups of subjects were asked to evaluate saving plans that let the investor choose between alternative indexing-schemes before the saving period ends. The complexity of the different plans was manipulated in two ways: (1) increasing the number (...) of indexing options; (2) reducing the quality of information upon which the choice between different indices is made. We show that an increase in the number of indexing-options produces a negative complexity effect when the quality of information is high. The same change however results in a positive flexibility effect when the quality of information is low. More generally our results suggest a `negative cross interaction of complexity effects' and that the impact of complexity is marginally decreasing. We discuss possible cognitive explanations to the observed evaluation-patterns. (shrink)

This paper asks why information should ever be expressed vaguely, re-assessing some previously proposed answers to this question and suggesting some new ones. Particular attention is paid to the benefits that vague expressions can have in situations where agreement over the meaning of an expression cannot be taken for granted. A distinction between two different versions of the above-mentioned question is advocated. The first asks why human languages contain vague expressions, the second question asks when and why a speaker should (...) choose a vague expression when communicating with a hearer. While the former question is purely theoretical, the latter has practical implications for the computational generation of utterances in Natural Language Generation (NLG). (shrink)

Neuroeconomics is examined critically using data on the response times of subjects who were asked to express their preferences in the context of the Allais Paradox. Different patterns of choice are found among the fast and slow responders. This suggests that we try to identify types of economic agents by the time they take to make their choices. Nevertheless, it is argued that it is far from clear if and how neuroeconomics will change economics.

The notion of bounded rationality has recently gained considerable popularity in the behavioural and social sciences. This article surveys the different usages of the term, in particular the way ‘anomalosus’ behavioural phenomena are elicited, how these phenomena are incorporated in model building, and what sort of new theories of behaviour have been developed to account for bounded rationality in choice and in deliberation. It also discusses the normative relevance of bounded rationality, in particular as a justifier of non‐standard reasoning and (...) deliberation heuristics. For each of these usages, the overview discusses the central methodological problems. (shrink)

The Adam Smith problem refers to a claimed inconsistency between the Theory of Moral Sentiments and the Wealth of Nations, regarding the portrayal of human nature in these two books. Previous research predominantly resolved the claimed inconsistency by uncovering virtuous, less selfish character traits in the Wealth of Nations. This article voices caution. I acknowledge – on methodological grounds – fundamental differences regarding the portrayal of human nature in Smith’s behavioral ethics, i.e. the Theory of Moral Sentiments, as compared with (...) Smith’s economic research. The key argument is that Smith’s two books address different research problems and hence do not, need not and cannot adopt the same view of human nature – for methodological reasons, so my argument. Adam Smith scholarship overlooked that Smith himself in considerable degrees understood “economic man” as a heuristic abstraction. I connect to the philosophies of science of Imre Lakatos and Karl Popper. (shrink)

Public communication is secure if a hostile third-party cannot decode the messages exchanged by the communicating parties. In Nash equilibrium, communication by computationally unbounded players cannot be secure. We assume complexity averse players, and show that a simple, secure, and costless communication protocol becomes available as the marginal complexity cost tends to zero.

In strategic situations, agents base actions on knowledge and beliefs. This includes knowledge about others’ strategies and preferences over strategy profiles, but also about other external factors. Bernheim and Pearce in 1984 independently defined the game theoretic solution concept of rationalizability, which is built on the premise that rational agents will only take actions that are the best response to some situation that they consider possible. This accounts for other agents’ rationality as well, limiting the strategies to which a particular (...) agent must respond, enabling further elimination until the strategies stabilize. We seek to generalize rationalizability to account not only for actions, but knowledge of the world as well. This will enable us to examine the interplay between action based and knowledge based rationality. We give an account of what it means for an action to be rational relative to a particular state of affairs, and in turn relative to a state of knowledge. We present a class of games, Epistemic Messaging Games, with a communication stage that clarifies the epistemic state among the players prior to the players’ actions. We use a history based model, which frames individual knowledge in terms of local projections of a global history. With this framework, we give an account of rationalizability for subclasses of EMG. (shrink)

Socio-economic decisions are commonly explained by rational cost versus benefit considerations, whereas person variables have not much been considered. The present study aimed at investigating the degree to which dispositional power motivation and affective states predict socio-economic decisions. The power motive was assessed both indirectly and directly using a TAT-like picture test and a power motive self-report, respectively. After 9 months, 62 students completed an affect rating and performed on a money allocation task. We hypothesized and confirmed that dispositional power (...) should be associated with a tendency to maximize one’s profit but to care less about another party’s profit. Additionally, positive affect showed effects in the same direction. The results are discussed with respect to a motivational approach explaining socio-economic behaviour. (shrink)

Ainslie challenges our interpretation of the properties of hyperbolic discount curves in an iterated prisoners’ dilemma model. In this reply, we discuss the emergence of hyperbolic discount functions in the behavioral economics literature and evaluate their properties. Furthermore, we present a summarized version of our IPD model and evaluate Ainslie’s points of contention.