One of the major unexplained gaps in the science of economics is the assumption that consumers are rational. Based on the assumption of rationality economics papers are littered with differential equations and other forbidding mathematics which describe how consumers make choices. But in the real world consumers don't solve differential equations in order to decide whether or not to buy a cup of coffee. This is a sticky problem. The standard rebuttal is to point out that the flight of a baseball can also be described with all sorts of forbidding differential equations. The fact that baseball players don't solve the differential equations which describe the flight of the ball doesn't mean that they can't catch! Baseball players must subconsciously approximate this mathematical process.
Gigerenzer points out that the standard rebuttal is wrong. A baseball player couldn't hope to gather and process all the information about the flight of a ball in real time, even approximately. Instead they use what he calls the gaze heuristic: 'fix your eyes on the ball and adjust your running speed so that your angle of vision to the ball remains constant.' The interesting thing about the gaze heuristic is that it ignores virtually all of the information about the ball's flight and focuses on just one piece of information: your angle of vision relative to the ball. But that single piece of information is enough to reliably let people catch a ball.
That in a nutshell is the concept of bounded rationality. Once you factor in the cost of gathering and processing information it becomes extremely irrational to make decisions by solving differential equations. Heuristics (AKA rules of thumb) are the way to go. They give you a lot more bang for your information-processing buck. Here is the truly radical part of Gigerenzer's book. If you were to simply claim that heuristics allow people to make decisions that are almost as good on vastly less information then I doubt many modern social scientists would disagree. But in fact Gigerenzer shows that heuristics can outperform the information-greedy favorites of the social sciences like multiple regression analysis and neural networks with back propagation.
Another really nice thing about this book is that Gigerenzer is a very good writer with a very light touch. You will not find the heavy and ponderous writing that you normally expect from scholars. This book is an easy and fast read that belongs on the shelf of everyone interested in politics and the social sciences. You may also want to consider
The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences
(you can easily and profitably skip over the math).
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Coconuts
Received the book in a bad condition.
Reviewed in Singapore on January 12, 2021
Coconuts
Reviewed in Singapore on January 12, 2021
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