Better Behaved Behavioral Models

Posted on June 15, 2013

We often can’t rely on ourselves to act rationally. We know this, but much social science has a bad habit of ignoring it. A more realistic role for rationality is needed to grasp the unhidden but unmodeled relationship between decisions and actions. We evolved to frequently act without deciding.

The widely used Rational Actor Model rests on three assumptions: First, life is a stream of decisions, second we make them consciously, often by calculation, and third, they lead us to act rationally. One of many demonstrations that these are all frequently false, is the reliable failure, despite what we consciously and rationally decide, of most self-improvement resolutions. Much of what we do isn’t consciously considered or calculated on the spot, and what we know often doesn’t cause us to act accordingly.

The Rational Actor Model isn’t an action model; it’s a decision-model that sadly ignores how we do much of what we do. It is fundamentally aspirational, under-empirical, and applies only in limited situations. Yet this “rationalist delusion” still dominates economics.

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Source material from Scientific American