Read: How we decide

  • (Economic) decision making and emotions seem not to mix. Homo oeconomicus is a cold, emotionless computer of utility. Always maximizing, and when endowed with all information always finding the optimal course of action, be it which house or car to buy or what ice cream to pick at the gelato house. That is simple decisions that involve comparisons of only a few or just one characteristic of the available choice options as well as complex decision problems that involve a high dimension of interdependent characteristics all invoke the same process: Conscious optimization.

    And that ain’t true.

    In “How we decide” Jonah Lehrer explores the cognitive and emotional side of decision making. Following the standard recipe of popular science books Lehrer introduces the reader to a number of different case studies – or anecdotes – to show how emotions allow us to decide at all, how and under what circumstances emotions and subconscious deliberations help improving our decisions and how and when emotions impair our decision making. All the anecdotes are accompanied by brief explanations of the underlying mechanisms inside the brain, the underlying neuroscience.

    Lehrer’s narrative is clear and intriguing as he – as so many others before him – understands to arrest his readers’ attention by counterintuitive advice. For instance, complex problems are solved best by not contemplating about every detail and carefully considering all dimensions of the decision problem. We tend to get our “decision weights” wrong and focus on the wrong characteristics (like the size of the house instead of the length of the daily commute). Letting the subconscious mind work on the problem and than pick what feels right will often result in a better long-term choice in such complex decision problems. Simple choices, however, can benefit from actual, conscious, optimizing behavior.

    “How we decide” is a well balanced, instructive text. It might get you interested in neuroscience and its close relative neuroeconomics…

Read: On being Certain - Believing You Are Right Even When You're Not

  • Earlier this year I read about cognitive dissonance, the denial of one’s own mistakes, and the resulting bad decision making. Now I have read something related, yet completely different. On being certain is about knowledge and meta-knowledge, the feeling of knowing something, to be certain about something and more general about cognition. Since the author, Robert Burton, is a neuroscientist explanations for the what and why seem, at least to me, more objective than some related work by more traditional psychologists. However, one of the main points the author wishes to convey is about such objectivity, or rather unjustified certainty about the underlying truth. As all reasoning is influenced by the decision maker’s, let’s call it, “wiring” there is no absolute objectivity.

    The book is quite compelling and the author offers well-balanced arguments. The underlying cognitive processes are nicely illustrated and their implications discussed from different viewpoints. Since most deliberations are subconscious the book ultimately boils down to the question “How do we know what we know?”

    As a side effect, at the end of the book it is once more perfectly clear: There is no perfect rational (economic) man.