Behavioral Finance is an evolving field that studies how psychological factors affect decision making under uncertainty. This study seeks to find the influence of certain identified behavioral financial biases on the decision-making process of investors in developing countries. This research examines the moderating effect of Information asymmetry on the two most important and commonly used cognitive biases, namely Anchoring bias and Optimism bias and decision making and investigates whether Risk perception mediates the relationship between them or not. Quantitative research has (...) been conducted using a structured questionnaire for data collection. After completing the pilot study, a questionnaire was designed and sent to investors via online channels. Data has been collected from 317 real estate investors. Mediation analysis has been performed using model 4 and moderation analysis by applying model 15 of Process Macros for the interaction effect. The study investigated that both cognitive biases have a significant positive effect on investors’ decisions and Risk perception also significantly mediates the relationship between them. Consistency with other studies suggests that Information asymmetry has a significant moderating effect. The proposed conceptual model provides insight into how investors’ decisions are influenced by behavioral biases in the real estate sector and enhances the understanding of cognitive biases in the real estate sector. This study is recommended for real estate investors and policymakers of emerging and developed countries. The current study is the first of its kind, focusing on cognitive biases on investment decisions with mediating role of Risk perception and the moderating effect of Information asymmetry. (shrink)

I discuss under what conditions the objection that an expert’s argument is biased by her self-interest can be a meaningful and sound argumentative move. I suggest replacing the idea of bias qua self-interest by that of a conflict of interests, exploit the distinction between an expert context and a public context, and hold that the objection can be meaningful. Yet, the evaluation is overall negative, because the motivational role of self-interest for human behavior remains unclear. Moreover, if recent social-psychological results (...) from the “heuristics and biases” program are accepted, it is plausible to assume that humans also satisfice (rather than optimize/maximize) when identifying and then acting in their self-interest. My thesis is: insofar as the objection is sound with a particular audience, it is not needed; and insofar as the objection is needed, it is unsound. (shrink)

We propose to expand the conversation around moral enhancement from direct brain-altering methods to include technological means of modifying the environments and media through which agents can achieve moral improvement. Virtual Reality (VR) based enhancement would not bypass a person’s agency, much less their capacity for reasoned reflection. It would allow agents to critically engage with moral insights occasioned by a technologically mediated intervention. Users would gain access to a vivid ‘experience machine’ that allows for embodied presence and immersion in (...) a virtual world that meaningfully replicates relevant aspects of real life. We explore how VR can train empathy and foster moral growth in complex ways that would be inaccessible even for traditional moral education. Virtual Reality Perspective Taking is a unique medium for making empathy more reflective. (shrink)

It makes sense that the more information people share, the better they communicate. To evaluate the effect of knowledge overlap on the effectiveness of communication, participants played a communication game where the “director” identified objects to the “addressee”. Pairs either shared information about most objects' names (high overlap), or about the minority of objects' names (low overlap). We found that high-overlap directors tended to use more names than low overlap directors. High overlap directors also used more names with objects whose (...) names only they knew, thereby confusing their addressees more often than low-overlap directors. We conclude that while sharing more knowledge can be beneficial to communication overall, it can cause communication to be locally ineffective. Sharing more information reduces communication effectiveness precisely when there is an opportunity to inform—when people communicate information only they themselves know. (shrink)

Basing their claims on findings in the behavioral sciences that illuminate cognitive deficiencies, scholars spanning multiple disciplines argue that certain features of free market capitalist societies threaten human wellbeing, especially insofar as such societies are marked by a proliferation of consumer choices and incessant demands on decision making. This paper thus attempts three things. First, it outlines the criticisms of the expansive freedoms found in free market societies, based on those findings, in order to provide a reliable overview of the (...) shape of the critics’ concerns. Second, it surveys typical objections to these critics’ concerns, while also taking note of actual and anticipated counter-responses, in order to demonstrate why the debate about the value of those freedoms is not settled by those objections. Third, it argues that one objection remains that demands further debate and consideration before the critics’ choice restrictions should materialize. Namely, since there is solid evidence that entrepreneurship contributes to overall happy and healthy societies, and since the benefits of entrepreneurship are best realized in the types of societies marked by more expansive freedoms than the critics would countenance, the critics, who are concerned with general wellbeing, ought to consider the impact of their choice-restricting proposals on entrepreneurship. This paper does not claim that these critics offer baseless concerns about various threats to our wellbeing that arise from ample exercises of liberty, but it does argue that recognizing the role that entrepreneurship plays in fostering such wellbeing severely dampens the force of their implications for liberty. (shrink)

When making decisions, humans can observe many kinds of information about others' activities, but their effects on performance are not well understood. We investigated social learning strategies using a simple problem-solving task in which participants search a complex space, and each can view and imitate others' solutions. Results showed that participants combined multiple sources of information to guide learning, including payoffs of peers' solutions, popularity of solution elements among peers, similarity of peers' solutions to their own, and relative payoffs from (...) individual exploration. Furthermore, performance was positively associated with imitation rates at both the individual and group levels. When peers' payoffs were hidden, popularity and similarity biases reversed, participants searched more broadly and randomly, and both quality and equity of exploration suffered. We conclude that when peers' solutions can be effectively compared, imitation does not simply permit scrounging, but it can also facilitate propagation of good solutions for further cumulative exploration. (shrink)

Recent work in economics has rediscovered the importance of belief-based utility for understanding human behaviour. Belief ‘choice’ is subject to an important constraint, however: people can only bring themselves to believe things for which they can find rationalizations. When preferences for similar beliefs are widespread, this constraint generates rationalization markets, social structures in which agents compete to produce rationalizations in exchange for money and social rewards. I explore the nature of such markets, I draw on political media to illustrate their (...) characteristics and behaviour, and I highlight their implications for understanding motivated cognition and misinformation. (shrink)

I clarify and defend the hypothesis that human belief formation is sensitive to social rewards and punishments, such that beliefs are sometimes formed based on unconscious expectations of their likely effects on other agents – agents who frequently reward us when we hold ungrounded beliefs and punish us when we hold reasonable ones. After clarifying this phenomenon and distinguishing it from other sources of bias in the psychological literature, I argue that the hypothesis is plausible on theoretical grounds and I (...) show how it illuminates and unifies a range of psychological phenomena, including confabulation and rationalisation, positive illusions, and identity-protective cognition. (shrink)

A large body of research in cognitive psychology and neuroscience draws on Bayesian statistics to model information processing within the brain. Many theorists have noted that this research seems to be in tension with a large body of experimental results purportedly documenting systematic deviations from Bayesian updating in human belief formation. In response, proponents of the Bayesian brain hypothesis contend that Bayesian models can accommodate such results by making suitable assumptions about model parameters. To make progress in this debate, I (...) argue that it is fruitful to focus not on specific experimental results but rather on what I call the ‘sources of epistemic irrationality’ in human cognition. I identify four such sources and I explore whether and, if so, how Bayesian models can be reconciled with them: processing costs, evolutionary suboptimality, motivated cognition, and error management. 1 Introduction 2 The Bayesian Brain 3 The Problem of Epistemic Irrationality 3.1 Bayesian inference and rationality 3.2 Intuitive Bayesian inference 4 Sources of Epistemic Irrationality 4.1 Processing costs 4.2 Evolutionary suboptimality 4.3 Motivational influences 4.4 Error management 5 Conclusion. (shrink)

In his groundbreaking book, Against Coherence (2005), Erik Olsson presents an ingenious impossibility theorem that appears to show that there is no informative relationship between probabilistic measures of coherence and higher likelihood of truth. Although Olsson's result provides an important insight into probabilistic models of epistemological coherence, the scope of his negative result is more limited than generally appreciated. The key issue is the role conditional independence conditions play within the witness testimony model Olsson uses to establish his result. Olsson (...) maintains that his witness model yields charitable ceteris paribus conditions for any theory of probabilistic coherence. Not so. In fact, Olsson's model, like Bayesian witness models in general, selects a peculiar class of models that are in no way representative of the range of options available to coherence theorists. Recent positive results suggest that there is a way to develop a formal theory of coherence after all. Further, although Bayesian witness models are not conducive to the truth, they are conducive to reliability. (shrink)

Appeals to human nature are ubiquitous, yet historically many have proven ill-founded. Why? How might frequent errors be remedied towards building a more robust and reliable scientific study of human nature? Our aim is neither to advance specific scientific or philosophical claims about human nature, nor to proscribe or eliminate such claims. Rather, we articulate through examples the types of errors that frequently arise in this field, towards improving the rigor of the scientific and social studies. We seek to analyze (...) such claims rhetorically, cognitively, and epistemically. Namely, how do we think about human nature? Claims about human nature, we show, are susceptible to widely exhibited deficits in cognitive tendencies such as framing, confirmation bias, satisficing, and teleological perspectives, as well as motivated reasoning. Such missteps foster methodological, empirical, and psychological mistakes and biases. Specifically, they promote the naturalizing error, whereby cultural ideology and values are projected onto an apparently objective description of nature. Concrete remedies are offered to aid scientists in conducting and reporting their research goals and findings more responsibly and effectively (relevant also to educators and other communicators who convey these findings publicly). Recommendations include acknowledging that human nature claims are often context-dependent, seeking multiple critical perspectives, and explicitly labeling uncertainties. (shrink)

In this interview, professor Davis discusses the evolution of his career and research interests as a philosopher-economist and gives his perspective on a number of important issues in the field. He argues that historians and methodologists of economics should be engaged in the practice of economics, and that historians should be more open to philosophical analysis of the content of economic ideas. He suggests that the history of recent economics is a particularly fruitful and important area for research exactly because (...) it is an open-ended story that is very relevant to understanding the underlying concerns and concepts of contemporary economics. He discusses his engagement with heterodox economics schools, and their engagement with a rapidly changing mainstream economics. He argues that the theory of the individual is “the central philosophical issue in economics” and discusses his extensive contributions to the issue. (shrink)

Pascal’s Wager involves expected utilities. In this chapter, we examine the Wager in light of two main features of expected utility theory: utilities and probabilities. We discuss infinite and finite utilities, and zero, infinitesimal, extremely low, imprecise, and undefined probabilities. These have all come up in recent literature regarding Pascal’s Wager. We consider the problems each creates and suggest prospects for the Wager in light of these problems.

We argue that two long-term goals of AI research stand in tension with one another. The first involves creating AI that is safe, where this is understood as solving the problem of value alignment. The second involves creating artificial general intelligence, meaning AI that operates at or beyond human capacity across all or many intellectual domains. Our argument focuses on the human capacity to make what we call “existential choices”, choices that transform who we are as persons, including transforming what (...) we most deeply value or desire. It is a capacity for a kind of value misalignment, in that the values held prior to making such choices can be significantly different from (misaligned with) the values held after making them. Because of the connection to existentialist philosophers who highlight these choices, we call the resulting form of risk “existentialist risk.” It is, roughly, the risk that results from AI taking an active role in authoring its own values rather than passively going along with the values given to it. On our view, human-like intelligence requires a human-like capacity for value misalignment, which is in tension with the possibility of guaranteeing value alignment between AI and humans. (shrink)

This policy-capturing study, conducted in China, investigated the cognitive basis of managerial decisions to make a corporate charitable donation, a global issue in the context of corporate social responsibility research and practice. Participants responded to a series of scenarios manipulating pressure from the five stakeholders most commonly addressed by CSR research. The independent variables examined included organizational factors and the participants’ personal values. Results indicate a large positive effect of shareholder and governmental pressure on the decision with lesser positive effects (...) from customers and competitors. Surprisingly, employee pressure had a negative effect on the decision to make a charitable donation. Further, personal values and perceived CEO attitudes toward charity were significantly related to the decisions participants made. In line with our theorizing, the findings indicate that a combination of personal, organizational, and institutional factors was salient in the minds of decision makers. (shrink)

This paper critically explores the ethical dimensions of Behavioral Public Policy (BPP), a domain grounded in the understanding that human rationality is bounded and that this limitation often leads to behaviors deemed irrational. By applying the behavioral lens, which posits that people operate under bounded rationality, BPP aims to craft interventions that safeguard individuals against their biases. However, this approach raises significant ethical concerns, both in the scientific underpinnings of BPP and its application through policy interventions. Accordingly, this paper examines (...) two distinct ethical dimensions of BPP, both as a scientific discipline and through its intervention methodologies. The analysis of the first dimension argues that, viewing bounded rationality as only instrumental in decision-making processes, risks oversimplifying ethical complexities. Such simplification may ignore the moral and value-based rationalities underlying decisions, potentially misattributing instances of immorality and akrasia (the failure to act according to one's judgment) to mere deficiencies in rational thinking. Secondly, the paper examines the impact of BPP on moral behavior and character development, addressing ethical concerns like the evidentiary basis of BPP research, the bounded rationality of choice architects themselves, and the morality of behavior changes induced by policy. Overall, this article provides a much-needed examination of the moral considerations associated with behavioral strategies in public policy and its epistemological foundations, contributing to a more comprehensive understanding of their ethical implications . (shrink)

This book takes purism about knowledge as the default position and defends it from the challenges of pragmatic encroachment. The book is divided into two parts, a negative and a positive one. The negative part critically examines existing purist strategies in response to pragmatic encroachment. The positive part provides a new theory of how practical factors can systematically influence our confidence and explores some implications of such influence.

Sustainability problems often seem intractable. One reason for this is due to difficulties coordinating actors’ efforts to address socially responsible outcomes. Drawing on theories of bounded ethicality and incorporating work on communicating shared values in coordinating action this paper outlines the lack coordination as a matching issue, one complicated by underlying heterogeneity in actors’ moral values and thus motivation to address socially responsible outcomes. Three factors contribute to this matching problem. First, we argue it is not actors’ simple cognitive awareness, (...) but their moral awareness of social issues that explains why certain actors move to address problems while others do not. In other words, actors may recognize sustainability problems, but are not motivated to solve them as they are not understood as moral problems. Second, we posit that progress requires alignment in issues that some actors find worth addressing whereas others do not, thus explaining how heterogeneity in moral perceptions interrupt coordination towards socially important goals. Finally, we propose that progress is undermined if actors myopically focus on level-specific outcomes in ways that elucidates why institutional responses often fail to address individual outcomes and vice versa. We use the existing literature on the socially important issue of food waste to examine our theoretical contribution and develop a typology that explains conditions that inhibit coordination. Thus, our work proposes a psycho-structural view on matching and coordination toward sustainable outcomes, highlighting how psychological and structural constraints prevent effective coordination in addressing sustainability goals. (shrink)

The paper critiques the relationship between personalist ethics and institutional economics, and accepts that institutional economics can be difficult to reconcile with humanistic management that builds on personalist ethics. Even so the paper connects impersonalist ethics with institutional economics. On this ground, the paper demonstrates how theory and practice of personalist humanist management can lean on impersonalist ethics, i.e., institutional economics. Three pathways are laid out for such leanings. It is argued that to understand these alignments is important to improve (...) the success of humanistic management, when a market economy context is given. The paper further contends that personalist humanistic management may imply abandoning the market economy when it positions itself in opposition to institutional economic reasoning that underpins the market economy. (shrink)

In many learning or inference tasks human behavior approximates that of a Bayesian ideal observer, suggesting that, at some level, cognition can be described as Bayesian inference. However, a number of findings have highlighted an intriguing mismatch between human behavior and standard assumptions about optimality: People often appear to make decisions based on just one or a few samples from the appropriate posterior probability distribution, rather than using the full distribution. Although sampling-based approximations are a common way to implement Bayesian (...) inference, the very limited numbers of samples often used by humans seem insufficient to approximate the required probability distributions very accurately. Here, we consider this discrepancy in the broader framework of statistical decision theory, and ask: If people are making decisions based on samples—but as samples are costly—how many samples should people use to optimize their total expected or worst-case reward over a large number of decisions? We find that under reasonable assumptions about the time costs of sampling, making many quick but locally suboptimal decisions based on very few samples may be the globally optimal strategy over long periods. These results help to reconcile a large body of work showing sampling-based or probability matching behavior with the hypothesis that human cognition can be understood in Bayesian terms, and they suggest promising future directions for studies of resource-constrained cognition. (shrink)

The current paper is the first to report an experimental study of “Min- and Max-induced rankings” (MMIR), i.e., a family of set rankings that require preferences over sets to be induced from comparison of the best and/or worst elements within those sets. These MMIR do not perform well in predicting preferences over simple sets of monetary outcomes. In this paper, we investigate the axiomatic underpinnings of these models by means of pairwise choice experiments. From this investigation, some important conclusions can (...) be drawn: Axioms that prevent rankings to be based on total-goodness, as well as monotonicity conditions (ensuring that replacing a set element with a better one results in a better set) cannot be refuted. Axioms that rule out any utilization of the relative difference in the values of the outcomes and axioms that prevent rankings to be based on average-goodness are all systematically violated. The Uniform Expected Utility (UEU) criterion seems to meet the apparent shortcomings of the MMIR. Some frequently occurring preference patterns, however, suggest that a significant portion of the participants uses neither a Min- or Max-induced ranking, nor UEU, but some other unspecified decision rule, possibly characterized by the tendency to prefer a diversification of uncertainty. (shrink)

This paper aims to flesh out the celebrated notion of reflective equilibrium within a probabilistic framework for epistemic rationality. On the account developed here, an agent's attitudes are in reflective equilibrium when there is a certain sort of harmony between the agent's credences, on the one hand, and what the agent accepts, on the other hand. Somewhat more precisely, reflective equilibrium is taken to consist in the agent accepting, or being prepared to accept, all and only claims that follow from (...) a maximally comprehensive theory that is more probable than any other such theory. Drawing on previous work, the paper shows that when an agent is in reflective equilibrium in this sense, the set of claims they accept or are prepared to accept is bound to be logically consistent and closed under logical implication. The paper also argues that this account can explain various features of philosophical argumentation in which the notion of reflective equilibrium features centrally, such as the emphasis on evaluating philosophical theories holistically rather than in a piecemeal fashion. (shrink)

A central concern of the cognitive science of language since its origins has been the concept of the linguistic system. Recent approaches to the system concept in language point to the exceedingly complex relations that hold between many kinds of interdependent systems, but it can be difficult to know how to proceed when “everything is connected.” This paper offers a framework for tackling that challenge by identifying *scale* as a conceptual mooring for the interdisciplinary study of language systems. The paper (...) begins by defining the scale concept—simply, the possibility for a measure to be larger or smaller in different instances of a system, such as a phonemic inventory, a word's frequency value in a corpus, or a speaker population. We review sites of scale difference in and across linguistic subsystems, drawing on findings from linguistic typology, grammatical description, morphosyntactic theory, psycholinguistics, computational corpus work, and social network demography. We consider possible explanations for scaling differences and constraints in language. We then turn to the question of *dependencies between* sites of scale difference in language, reviewing four sample domains of scale dependency: in phonological systems, across levels of grammatical structure (Menzerath's Law), in corpora (Zipf's Law and related issues), and in speaker population size. Finally, we consider the implications of the review, including the utility of a scale framework for generating new questions and inspiring methodological innovations and interdisciplinary collaborations in cognitive-scientific research on language. (shrink)

If we can and do have some self‐knowledge, how do we acquire it? By examining the ways in which we acquire self‐knowledge—by introspection—we can try shedding some light onto the nature and the breadth of self‐knowledge, as others have tried to do with other forms of knowledge. My aim is to show that introspection involves multiple (that is, at least two) distinct processes, a view I call “pluralism about introspection”. One of the virtues of pluralism is that it explains how (...) we can have such a wide variety of self‐knowledge despite our cognitive limitations. (shrink)

The fundamental concept of structured chemical system has been introduced and analysed in this paper. This concept, as in biology but not in physics, is very important in chemistry. In fact, the main chemical concepts (molecule and compound) have been identified as systemic concepts and their use in chemical explanation can only be justified in this approach. The fundamental concept of “environment” has been considered and then the system concept in mechanics, chemistry and biology. The differences and the analogies between (...) the use of the systemic approach in these disciplines have been analyzed and correlated to the general problem of reductionism and complexity perspectives. The inanimate–animate dichotomy can be reconsidered in this new approach. Since the chemical systemic concepts of molecule and compound can be dated to the nineteenth century, chemistry can be considered the first true systemic science and its historical evolution can be a model for other sciences (such as the humanities) where the systemic concepts are important. (shrink)

Theories of rational decision making often abstract away from computational and other resource limitations faced by real agents. An alternative approach known as resource rationality puts such matters front and center, grounding choice and decision in the rational use of finite resources. Anticipated by earlier work in economics and in computer science, this approach has recently seen rapid development and application in the cognitive sciences. Here, the theory of rationality plays a dual role, both as a framework for normative assessment (...) and as a source of scientific hypotheses about how mental processes in fact work. The latter project, often called rational analysis, depends for its success on a fine-grained characterization of the computational problem facing a decision maker, which may in turn depend on realistic assumptions about what the relevant agent is like. As a consequence, resource rationality involves a delicate, but often fruitful interplay between the normative and the descriptive. (shrink)

An incoherent visualization is when aspects of different senses of a word are present in the same visualization. We describe and implement a new model of creating contextual coherence in the visual imagination called Coherencer, based on the SOILIE model of imagination. We show that Coherencer is able to generate scene descriptions that are more coherent than SOILIE's original approach as well as a parallel connectionist algorithm that is considered competitive in the literature on general coherence. We also show that (...) co-occurrence probabilities are a better association representation than holographic vectors and that better models of coherence improve the resulting output independent of the association type that is used. Theoretically, we show that Coherencer is consistent with other models of cognitive generation. In particular, Coherencer is a similar, but more cognitively plausible model than the C3 model of concept combination created by Costello and Keane. We show that Coherencer is also consistent with both the modal schematic indices of perceptual symbol systems theory and the amodal contextual constraints of Thagard's theory of coherence. Finally, we describe how Coherencer is consistent with contemporary research on the hippocampus, and we show evidence that the process of making a visualization coherent is serial. (shrink)

The notion of “bounded rationality” was introduced by Simon as an appropriate framework for explaining how agents reason and make decisions in accordance with their computational limitations and the characteristics of the environments in which they exist (seen metaphorically as two complementary scissor blades).We elaborate on how bounded rationality is usually conceived in psychology and on its relationship with logic. We focus on the relationship between heuristics and some non-monotonic logical systems. These two categories of cognitive tools share fundamental features. (...) As a step further, we show that in some cases heuristics themselves can be formalized from this logic perspective. We have therefore two main aims: on the one hand, to demonstrate the relationship between the bounded rationality programme and logic, understood in a broad sense; on the other hand, to provide logical tools of analysis of already known heuristics. This may lead to results such as the characterization of fast and frugal binary trees in terms of their associated logic program here provided. (shrink)

This article introduces the topic ‘‘Production of Referring Expressions: Bridging the Gap between Computational and Empirical Approaches to Reference’’ of the journal Topics in Cognitive Science. We argue that computational and psycholinguistic approaches to reference production can benefit from closer interaction, and that this is likely to result in the construction of algorithms that differ markedly from the ones currently known in the computational literature. We focus particularly on determinism, the feature of existing algorithms that is perhaps most clearly at (...) odds with psycholinguistic results, discussing how future algorithms might include non-determinism, and how new psycholinguistic experiments could inform the development of such algorithms. (shrink)

Many compelling examples have recently been provided in which people can achieve impressive epistemic success, e.g. draw highly accurate inferences, by using simple heuristics and very little information. This is possible by taking advantage of the features of the environment. The examples suggest an easy and appealing naturalization of rationality: on the one hand, people clearly can apply simple heuristics, and on the other hand, they intuitively ought do so when this brings them high accuracy at little cost.. The ‘ought-can’ (...) principle is satisfied, and rationality is meaningfully normative. We show, however, that this naturalization program is endangered by a computational wrinkle in the adaptation process taken to be responsible for this heuristics-based (‘ecological’) rationality: for the adaptation process to guarantee even minimal rationality, it requires astronomical computational resources, making the problem intractable. We consider various plausible auxiliary assumptions in attempt to remove this obstacle, and show that they do not succeed; intractability is a robust property of adaptation. We discuss the implications of our findings for the project of naturalizing rationality. (shrink)

We propose a neural model of multiattribute-decision processes, based on an attractor neural network with dynamic thresholds. The model may be viewed as a generalization of the elimination by aspects model, whereby simultaneous selection of several aspects is allowed. Depending on the amount of synaptic inhibition, various kinds of scanning strategies may be performed, leading in some cases to vacillations among the alternatives. The model predicts that decisions of a longer time duration exhibit a lower violation of the simple scalability (...) law, as opposed to shorter decisions. Furthermore, the model is suggested as a general attribute-based decision module. Accordingly, various decision strategies are manifested depending on the module's parameters. (shrink)

We define social innovation as strategic decision making to improve social conditions and facilitate social changes in a desirable direction by dealing with crucial issues and solving fundamental societal problems. This paper proposes a framework that enables the decision maker to implement social innovation effectively. The framework consists of three influential theories or ways of thinking, that is, design thinking, systems thinking, and learning organization. This paper shows how these three approaches can be integrated to tackle a critical social problem (...) and develop a sustainable solution. We present a case study on an actual social issue to demonstrate its practical application. (shrink)

Behavioral ecologists often assume that natural selection will produce organisms that make optimal decisions. In the context of information processing, this means that the behavior of animals will be consistent with models from fields such as signal detection theory and Bayesian decision theory. We discuss work that applies such models to animal behavior and use the case of Bayesian updating to make the distinction between a description of behavior at the level of optimal decisions and a mechanistic account of how (...) decisions are made. The idea of ecological rationality is that natural selection shapes an animal's decision mechanisms to suit its environment. As a result, decision-making mechanisms may not perform well outside the context in which they evolved. Although the assumption of ecological rationality is plausible, we argue that the exact nature of the relationship between ecology and cognitive mechanism may not be obvious. (shrink)

The socioecological discourse has recently gained strong attention. Suddenly, most firms now try to engage quickly with precarious issues because consumers demand an attitude toward our grand challenges, not merely products anymore. Starting from neo‐institutionalist critiques, which dominate the corporate green and socialwashing discourse, this essay argues from a largely neglected perspective by drawing attention to the impacts on the longstanding pioneers of socioecologically valuable business practices. Almost no research to date has illuminated the phenomenon whereby pioneering firms lose their (...) unique selling propositions because others are ‘riding the wave’ and reaping where they have not sown. By applying a resource-based argumentation, the idea of a tragedy of intangible commons is unfolded to explain what made this phenomenon possible and why it could even occur. (shrink)

The Cognitive Reflection Test (CRT; Frederick, 2005) is designed to measure the tendency to override a prepotent response alternative that is incorrect and to engage in further reflection that leads to the correct response. It is a prime measure of the miserly information processing posited by most dual process theories. The original three-item test may be becoming known to potential participants, however. We examined a four-item version that could serve as a substitute for the original. Our data show that it (...) displays a.58 correlation with the original version and that it has very similar relationships with cognitive ability, various thinking dispositions, and with several other rational thinking tasks. Combining the two versions into a seven-item test resulted in a measure of miserly processing with substantial reliability (.72). The seven-item version was a strong independent predictor of performance on rational thinking tasks after the variance accounted for by cognitive ability and thinking dispositions had been partialled out. (shrink)

How can anyone be rational in a world where knowledge is limited, time is pressing, and deep thought is often an unattainable luxury? Traditional models of unbounded rationality and optimization in cognitive science, economics, and animal behavior have tended to view decision-makers as possessing supernatural powers of reason, limitless knowledge, and endless time. But understanding decisions in the real world requires a more psychologically plausible notion of bounded rationality. In Simple heuristics that make us smart (Gigerenzer et al. 1999), we (...) explore fast and frugal heuristics – simple rules in the mind's adaptive toolbox for making decisions with realistic mental resources. These heuristics can enable both living organisms and artificial systems to make smart choices quickly and with a minimum of information by exploiting the way that information is structured in particular environments. In this précis, we show how simple building blocks that control information search, stop search, and make decisions can be put together to form classes of heuristics, including: ignorance-based and one-reason decision making for choice, elimination models for categorization, and satisficing heuristics for sequential search. These simple heuristics perform comparably to more complex algorithms, particularly when generalizing to new data – that is, simplicity leads to robustness. We present evidence regarding when people use simple heuristics and describe the challenges to be addressed by this research program. Key Words: adaptive toolbox; bounded rationality; decision making; elimination models; environment structure; heuristics; ignorance-based reasoning; limited information search; robustness; satisficing; simplicity. (shrink)

The theory of revealed preference, which lies at the core of the neoclassical economic method, asserts that people's preference orderings are revealed by their actions. This assertion has two possible meanings, of which one is a truism and the other false. When a person joins a riot against the government, he reveals through this action that he would rather riot than not. This is the sense in which the assertion is a truism. But if one means that the person must (...) want a change of government, this is certainly false. His decision to riot could mean only that he considers it dangerous to stay on the sidelines. (shrink)

Gamification is an increasingly common marketing tool. Yet, to date, there has been little examination of its ethical implications. In light of the potential implications of this type of stealth marketing for consumer welfare, this paper discusses the ethical dilemmas raised by the use of gamified approaches to marketing. The paper draws on different schools of ethics to examine gamification as an overall system, as well as its constituent parts. This discussion leads to a rationale and suggestions for how gamification (...) could be regulated and/or controlled by more informal codes of conduct. The paper ends by outlining a practical framework which businesses can use to evaluate the potential ethical implications raised by their own gamified marketing techniques. (shrink)

A problem is a difference between what a person has and wants. A solution is anything that reduces the difference. These two simple definitions form the foundation of an ecological perspective on the often-complex, reciprocal relationships among people, their environments and their behaviours—a perspective that mixes causal ideas from psychology with consequential ideas from economics. The present article offers a brief introduction to this perspective and suggests how it might be instantiated by naturalistic observations and content analyses of narratives.

This article presents results from a simulation‐based study of inheritance inference, that is, inference from the typicality of a property among a “base” class to its typicality among a subclass of the class. The study aims to ascertain which kinds of inheritance inferences are reliable, with attention to the dependence of their reliability upon the type of environment in which inferences are made. For example, the study addresses whether inheritance inference is reliable in the case of “exceptional subclasses” (i.e., subclasses (...) that are known to be atypical in some respect) and attends to variations in reliability that result from variations in the entropy level of the environment. A further goal of the study is to show that the reliability of inheritance inference depends crucially on which sorts of base classes are used in making inferences. One approach to inheritance inference treats the extension of any atomic predicate as a suitable base class. A second approach identifies suitable base classes with the cells of a partition (of a preselected size k) of the domain of objects that satisfies the condition of maximizing the similarity of objects that are assigned to the same class. In addition to permitting more inferences, our study shows that the second approach results in inheritance inferences that are far more reliable, particularly in the case of exceptional subclasses. (shrink)