Interviews with Nobel Laureates in Economics

Should We Dump the Word “Gene”?

Whenever one discusses the underlying genetic influences on human behavior, one is opening themselves up to being labelled a determinist.  Part of the reason for that is a total missunderstanding of what the word “gene” actually means (not to mention the lack of understanding of the difference between a genotype and a phenotype).  But, it isn’t just the public that takes issue with the word “gene”.  So do some biologists, not least of which are geneticists.

John Hawks goes into the discussion here, but in the end he favors keeping the word around.

So in my view, “gene” is only problematic if we insist on confusing distinct biological processes. It is defined by transmission contrasts, in a Mendelian sense; it corresponds often (but perhaps not exclusively) with delimited DNA sequences, and it cannot by itself describe more complex functional properties such as methylation and epigenetic interactions.

“gene” means different things in these contexts, and obviously must include many distinct kinds of DNA configurations, from coding regions, to regulatory elements, to conserved noncoding segments. Since “allele” is extended even more broadly (any variant site qualifies), I don’t think “gene” is the problem here.

Dan Kahneman Interview

One of the founders of Cognitive Models in the Social Sciences gives an interview with Harry Kreisler.  (BTW, I cite Kahneman here.)

A Review of Cognitive Models and Bounded Rationality

Over the next few weeks (months?) I’ll be presenting a series of reviews of some of the major models in Decision Theory, a branch of both Economics and Political Science that has been on the rise for over 30 years. All of the models attempt to explain why humans act the way that they do in political and economic situations, and also to provide some normative answers to the question of what people should do in those situations.

The ultimate cause of human behavior is the mind. The mind, an emergent property from the workings of collections of neurons, hormones, proteins, and other biochemical agents, controls everything every human does. From their intended actions to their subconscious actions, all of it is controlled by the human analogue of a central processing unit. Cognitive models in the social sciences and particularly in political science and economics take seriously this point of view of the human decision maker and apply it to political and economic situations.

One of the major ideas of the subject is that people are equipped with a cognitive “toolbox” that houses tools that help them to solve problems in different environments. These tools come in the form of heuristics, or simple models, of a situation. Robert Axelrod in his 1973 paper, “Schema Theory: An information Processing Model of Perception and Cognition,” called his version of this model a Schema. It’s components were an input of information about a particular case, including what type of case or situation it is; an interpretation of the case at hand and a complete specification of it; and an accessibility check to see how closely the schema (or heuristics) currently available in ones “toolbox” fit the case, which lead to slight adjustments of the schema to fit the case better if warranted.

Herbert Simon forecasted such a theory with his 1955 paper, “A behavioral Model of Rational Choice.” In it he claimed that people, when confronted with a situation have available to them a set A of strategies, or actions, but will only consider a limited number of them, a subset B of A. The reason for this could be many, but is likely due in part to a lack of available information about the actions’ availability. For instance, most people when playing chess do not realize how many moves they have available to them at any given point in the game. There is an objective number of possible moves that far exceeds their limited set of perceived options.

Simon mentions that one of the most important ideas about a cognitive model approach to human decision making is in how we model the payoff functions of individuals. Classically payoff functions are the weighted sum of all the outcomes of all the options and individuals are presumed to make a “rational” decision based upon this information as to what action to take. Simon suggests instead of a “real-valued” payoff function, that is one that has a number as it’s output, we use a “vector” valued payoff function. The value of such a payoff function is that we can account for sub-payoffs within the total payoff of a given action that don’t sum together. For instance, in his example, if one is deciding between two jobs in two different cities, two of the payoff calculations could be 1) salary, and 2) weather. It is hard to add these two payoffs together. Instead a total payoff may contain both sets of information as is.

Another component to the vector valued function would have to include the history of past actions in similar situations. That is, it would need to be history-dependent. Again, using an example of Simon’s, you won’t know if you like cheese until you have tasted it.

Axelrod mentions that people often don’t have the time, nor the computing power, to evaluate every option available to them. Simon also discusses that the problem of a lack of computing power. A good cognitive model must take this into account by incorporating into the model these limits, or bounds, on an actor’s rationality.

The so called “fight or flight reflex” is a good example of the type of heuristic discussed in the literature. If you are being chased by a bear, you don’t have a lot of time to think about all of your options. Instead, you simplify your options down to just two: run; or stay and fight. One of those two may get you killed. But, if you happened to pick the one that kept you alive, then you are more likely to try that one again the next time you are in a similar situation than you are to try the opposing option that hasn’t yet been tried. Thus in the ordering of strategies, the tried and true trumps the unknown.

Another major component of cognitive models is loss or risk aversion. In “Loss Aversion in Riskless Choice: A Reference-Dependent Model,” Amos Tversky and Daniel Kahneman discuss the asymmetry of individual choice when faced with loss verses being faced with gain. People seem to behave in such a way as to be more worried about losing what they have, than in gaining more. They mention that such loss aversion can hamper situations such as negotiations if the outcomes of the negotiation are framed as losses. For example, it matters to people whether the surgery they are about to undergo has a 90% survival rate, or a 10% mortality rate. These are just different ways of stating the same idea, and Rational Choice Theory claims they are equal and that actors wouldn’t care which way the information was presented to them. The trouble is that the evidence says they do care.

Cognitive choice models prove to be a powerful refutation of the classical theory of the “rational actor”. In classical theory, human beings take the entire set of objective options, sift clearly through these options, weighing the differing payoffs assigned to each option, and taking the appropriate action that results in the greatest payoff to the individual. Cognitive models do away with much of this theory. Simon’s clearly states that people throw away much of the information available to them to simplify the calculations involved in a given situation. Axelrod also mentions that the relevance of information being inputted into ones calculations determines much of what is and is not thrown away, but that this may not always be accurate. That is, people, using a heuristic that has worked previously in a similar situation will often toss out information relevant to the current case because it doesn’t fit their preconceived model of action. This type of “data dumping” can result in outcomes contrary to the individual’s interests. Tversky and Kahneman make it clear that people are often more worried about losses than about gains, and that this can skew the payoff functions, and make their actions seem less rational to an outside observer, and in fact may seem irrational, upon reflection, to the participants themselves.

Much of this discussion may sound negative to the reader since cognitive models predict that individuals will, and often do, make erroneous decisions based on false assumptions. Amos Tversky and Daniel Kahneman discuss this concept to some degree in their paper, “Rational Choice and the Framing of Decisions (1986).” They say because cognitive models don’t allow for much of the rationalizing behavior that is necessary if one is to come to an “optimum” solution to a given case, that “no theory of choice can be both normatively adequate and descriptively accurate.” This means that cognitive models are best used in positive theories about human behavior, and suggests that the “rational actor model” may be best suited to normative theories of human behavior.

If we want to “get to the bottom” of why people make the decisions they make in political and economic situation, the cognitive model provides a great leap forward in that direction. It offers a clear system of evaluation that may be used by an individual that is also practical and realistic, though not always one that results in an “optimal” outcome. As such, it is a “good fit” to how humans actually make choices.

References

  • Axelrod, Robert. 1973. “Schema Theory: An Information Processing Model of Perception and Cognition.” The American Political Science Review, Vol. 67, No. 4, 1248-1266.
  • Simon, Herbert A. 1955. “A Behavioral Model of Rational Choice.” The Quarterly Journal of Economics, Vol. 69, No. 1, 99-118.
  • Tversky, Amos and Kahneman, Daniel. 1981. “The Framing of Decisions and the Psychology of Choice.” Science, New Series, Vol. 211, No. 4481, 453-458.
  • Tversky, Amos and Kahneman, Daniel. 1986. “Rational Choice and the Framing of Decisions.” The Journal of Business, Vol. 59, No. 4, Part 2: The Behavioral Foundations of Economic Theory, S251-S278.
  • Tversky, Amos and Kahneman, Daniel. 1991. “Loss Aversion in Riskless Choice: A Reference-Dependent Model.” The Quarterly Journal of Economics, Vol. 106, No. 4, 1039-1061.

Experimental Economics on the RISE

Want proof … look at the graph!

Human Behavioral Ecology Bibliography

Here’s a link to a huge list of papers on Human Behavioral Ecology.  It’s the study of how humans behave from an evolutionary point of view, including (from the Anthro page at UCSB):

  • social and economic aspects of cooperation;
  • testing models of human longevity
  • social learning of subsistence and social strategies
  • human foraging behavior
  • evolution of human growth and ecological variation
  • social and human capital in small-scale societies
  • biodemography and life history
  • fertility transitions and decision-making
  • social status, networks, and leadership
  • mate guarding and behavioral implications of sexual proprietariness
  • evolutionary medicine

… and more.

Many of the folk in the field are Anthropologists and Biologists, but they also study economic and political behavior.  To my mind, ALL social scientists are doing work in a subfield of human biology, but most of them don’t know it, and are so clueless about biology that they promote theories that clearly contradict reality.  Social Scientists should be required to take biology classes–especially evolution classes.  But, that’s just my two cents!

Senate Race: Merkley Ahead in Oregon

Here in Oregon, the race for President is less interesting than the race for congressional seats.  Obama is the clear winner here.

But, it’s been a battle for the senate.  According to Pollster.com, Merkley is ahead of the incumbant Republican Senator Gordon Smith by nearly 5 points.

Nationally it’s still tight, but the Dem’s seem to have a slight lead and end up with both the white house and the congress at the same time.  That’ll be a first since 1992.

Want a Job? Work on Your Handshake

Researchers at the University of Iowa found that applicants for a job who had “scored high with the handshake experts” were considered to be more employable by those offering the job.

What I’m wondering is, what the hell is a “handshake expert” and how do I become one?

Cyber-Monkey: Brain Muscle interface for a Paralysed Primate

at Neurophilosophy:

Researchers from the University of Washington have demonstrated that paralysed monkeys can move using a simple neuroprosthesis consisting of an external electrical circuit which connects individual neurons in the motor cortex to muscles in the arm.

Why Biology Needs Mathematical Models

John Hawks reviews Peter Turchin’s 1998 book, Quantitative Analysis of Movement.

I tend to lecture about genetic models, for which there is a great value in simplicity (point 3), but which may require quite complicated extensions to handle reasonable biological populations (point 2). In that connection, some reasonable people go to extremes of interpretation — sometimes claiming that the data necessitate some assumption on the basis of a very simplified model, and in other cases claiming that no model can apply to the complex history of the population. It is our task (my task) to determine which factors are important and conceivably affect results, and which will always be too weak to influence the interpretation of the data (point 1). And the end will often be to discover evidence for values in past human populations for which we have no direct means of estimating aside from genetic variation (point 5).