Deep Rationality: The Evolutionary Economics of Decision Making
What is a “rational” decision? Economists traditionally viewed rationality as maximizing expected satisfaction. This view has been useful in modeling basic microeconomic concepts, but falls short in accounting for many everyday human decisions. It leaves unanswered why some things reliably make peop...
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| Main Authors: | , , , , , |
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2009
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/soss_research/727 https://ink.library.smu.edu.sg/context/soss_research/article/1726/viewcontent/nihms101580.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | What is a “rational” decision? Economists traditionally viewed rationality as maximizing expected satisfaction. This view has been useful in modeling basic microeconomic concepts, but falls short in accounting for many everyday human decisions. It leaves unanswered why some things reliably make people more satisfied than others, and why people frequently act to make others happy at a cost to themselves. Drawing on an evolutionary perspective, we propose that people make decisions according to a set of principles that may not appear to make sense at the superficial level, but that demonstrate rationality at a deeper evolutionary level. By this, we mean that people use adaptive domain-specific decision-rules that, on average, would have resulted in fitness benefits. Using this framework, we re-examine several economic principles. We suggest that traditional psychological functions governing risk aversion, discounting of future benefits, and budget allocations to multiple goods, for example, vary in predictable ways as a function of the underlying motive of the decision-maker and individual differences linked to evolved life-history strategies. A deep rationality framework not only helps explain why people make the decisions they do, but also inspires multiple directions for future research. |
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