Rational decision-making

The simpler a message is conveyed, the better it is understood and the easier it is to find truth in what was said. However, simplicity is not always that accurate. If a decision strategy is formulated by three questions that are answered with a ‘yes or no’ – it would ignore other possible measured predictors; it would ignore quantitative results and it may be nothing but suggestive of inaccuracy. Asking three questions to formulate an entire decision can, in other words, be described as too fast and frugal. Fast because it would not involve much discernment and frugal because it would only search for a fraction of information in a large pool of available resources. Despite the suspicion that may arise from simple decision-making strategies, they are more accurate than complex statistical classification methods. This summary will address how why and when fast and frugal heuristics are successful.

The main purpose of fast and frugal heuristics is to understand how real minds operate when making a decision in a pressured and fast-paced working environment. Sometimes people have to make decisions with no assistance and with limited time, constrained knowledge and no Internet. In such situations the mind will always be apt to the simple (this occurs in exams, for instance). Nevertheless, some people think that other human beings have supernatural powers to make decisions with endless time and eternal knowledge. This is not true. It is a revolution completely contrary to reality, which has given rise to the probability theory, otherwise known as the probabilistic revolution in science and ordinary life. This first revolution is about how the mind deals with an uncertain world – and therefore the origins of this revolution lie within the fields of rationality.

The probabilistic revolution

Demonstrative proof and probable reasoning are two contrasting realities of how the mind reasons. Many people only believe things if they see it. Thus, people who do not believe in God would opine that there is no proof to demonstrate that God exists. The existence of God, to such people, would only be provable through probability. This was an issue addressed by Blaise Pascal. Accepting the unending uncertainty about whether or not God exists, Pascal asked, is it rational to believe in Him? Pascal came to an affirmative answer. For those who have not experienced God to know that He exists, it is nevertheless rational for those people believe in God. Pascal thought that it is rational to sacrifice ones worldly pleasure in order to increase the possibility of ones salvation. No matter how immeasurable the probability of God’s existence – the reward of being a Christian is living for eternity. Thus, the probability of salvation is multiplied by its infinite value. By contrast, the probability of eternal damnation is infinitely abhorrent – and is not worth giving in to temptation and worldly desire. Accordingly, the probabilistic revolution is relevant to moral and religious schools of thought as well as intellectual attitudes.

The probabilistic revolution is relevant to science, economics and even the behaviour of animals. Animals are mammals, just as humans are mammals, and our brains engage in ways of thought to produce decisions or ways of acting. However, when the situation demanding a decision requires piles of research to be completed before the decision is reached – the probabilistic revolution becomes probabilistic in and of itself. As soon as one transcends from settings that are bound by simplicity, and enters into the real world where decisions require thorough analysis, time and knowledge to be accurate – the probabilistic models grow too large to handle. When these models turn towards reality, they thus become too complex and expect human beings to make decisions from supernatural sources rather than their natural way of thought.

Unbounded Rationality and Optimization under Constraints

Rationality can be different in type, shape and form. It is particular to each and every individual. Given that individuals are human and only think naturally – requiring supernatural lines of reasoning is irreconcilable with requiring rational lines of thought. There are two ways in which one could require supernatural reasoning: (1) unbounded rationality and (2) optimization under constraints. The first alleged type of rationality is modelled by the probability theory in the sense that it has near to no regard for the limitations of time, knowledge and computational mishaps that real humans are confronted with in everyday life. To acquire reliable information about the probability of a legitimate future occurrence, one would have to invest in years of research under the unbounded rationality theory. The reality is: humans are not supernatural and the future is not present to their eyes. Laplace opined that, for God, nature is certain and decisive; but for humans, nature is uncertain and indecisive.  The currency of human thought is probabilities, whereas God deals in certitude. However, proponents for unbounded rationality picture imperfect humans to stand in God’s perfect image. This approach is undesirable because it only focuses on the outcome, rather than the process, of reasoning with rationality.

Optimization under constraints expects the individual to go beyond the information given and to search for the decision. The problem with this theory is that it unrealistically presupposes that the search for information is internal and that the memory will provide all the sources that the decision demands. Any normal individual would know that this is not possible. This theory is too optimistic in that it expects the mind to go above and beyond what the mind naturally entails – while still keeping within the confines of the minds boundaries of knowledge.

Real life decision-making: Bounded Rationality Theory

Real people formulate the majority of their decisions and inferences by following a bounded type of rationality. Herbert Simon is the founding father of bounded rationality. In creating this theory, Simon took into consideration the limitations of the human mind and the influence of the atmosphere in which the mind operates. This is because in order to actually understand how real human minds work; we must look not only to how reasoning is limited but also how the mind adapts to real-world environments. Simon framed his ideas around the realistic capacities of the human mind rather than on fictitious competencies. One theory within bounded rationality is satisficing. This concept assumes that humans set an aspiration level, and the search for alternatives stops once one encounters an opportunity which exceeds the aspiration level.

The authors of this article, however, argue that the human decision-making process is even more narrowed. In their opinion, even satisficing is prone to requiring too large an amount of mental capacities. The theory of fast and fugal heuristics seeks to add to the bounded rationality theory by showing how stopping rules and decision rules can be used to simplify choice and while short and simple, this is the way in which the human mind operates its best. It is believed that satisficing and fast and fugal heuristics are two overlapping but distinct categories of bounded rationality theory.