Humans Vs Econs: The myth of Rationality
As every year recedes, memories tend to be captured in neat little packages with years cello-taped on them and placed on dusted shelves. It's that time of the year again and a maddening rush of memories are strewn all over my shelf, each clamoring to be the defining and decisive one for the year, one that would encapsulate and epitomize the whole of 365 days.
The best memories I would like to take away from this year unto all the remaining years of my life are the learning I have acquired through 2 gems of books: "Thinking, Fast and Slow'' and "Sapiens: A brief History of Humankind". They have forever changed the way I look at life, world and everything else.
Thinking, Fast and Slow is primarily concerned with decision making. We have been told since we were born about how perfectly efficient our brains are, about how our minds are the best computers ever made. Well, as it turns out, we are not nearly as perfect or as efficient as we would delude ourselves to be. Even the most intelligent and supposedly rational of us is extremely vulnerable to incorrect biases and heuristics (mental shortcuts) which make up our intuitions. Our minds are very easily primed into doing things we may not do otherwise or being someone we may not be in absence of any primes. How money primes individualism or mortality primes the acceptance of authoritarian ideas are relevant examples that glare us in our face.
Once the reader is acquainted with the idea that most of our day to day decisions are driven by biased, emotional but quick "system 1" rather than a rational, unbiased but lazy "system 2", things start to get interesting with the questioning of utility model and the basic assumption underlying all of economic theory. We may not be the proverbial rational agents who are trying to sit pretty on our utility curves making logical choices! In other words, we are humans, not Econs. Only human, with all the imperfections. For us, losses are not equal to costs; and regret, blame and loss aversion are real factors affecting our decisions.
Lastly, the book talks about how what we remember and what we experience may not be the same thing! "We are our remembering selves and the experiencing self that does our living is a stranger to us!" We are creating stories all the time and remember our lives as a narrative! We want to remember ourselves as heroes and obviously want a good ending to our story. In doing this, we end us neglecting the duration of our experiences and often only remember the peaks or the highs and the endings! Our mind makes choices based on our memories and hence our past learning may only help us in making better future memories and not necessarily better future experiences!
My imperfect brain is now tired and shall not intelligibly be able to talk about the other book! So let us leave the history of humankind to a future blog post.
The best memories I would like to take away from this year unto all the remaining years of my life are the learning I have acquired through 2 gems of books: "Thinking, Fast and Slow'' and "Sapiens: A brief History of Humankind". They have forever changed the way I look at life, world and everything else.
Thinking, Fast and Slow is primarily concerned with decision making. We have been told since we were born about how perfectly efficient our brains are, about how our minds are the best computers ever made. Well, as it turns out, we are not nearly as perfect or as efficient as we would delude ourselves to be. Even the most intelligent and supposedly rational of us is extremely vulnerable to incorrect biases and heuristics (mental shortcuts) which make up our intuitions. Our minds are very easily primed into doing things we may not do otherwise or being someone we may not be in absence of any primes. How money primes individualism or mortality primes the acceptance of authoritarian ideas are relevant examples that glare us in our face.
Once the reader is acquainted with the idea that most of our day to day decisions are driven by biased, emotional but quick "system 1" rather than a rational, unbiased but lazy "system 2", things start to get interesting with the questioning of utility model and the basic assumption underlying all of economic theory. We may not be the proverbial rational agents who are trying to sit pretty on our utility curves making logical choices! In other words, we are humans, not Econs. Only human, with all the imperfections. For us, losses are not equal to costs; and regret, blame and loss aversion are real factors affecting our decisions.
Lastly, the book talks about how what we remember and what we experience may not be the same thing! "We are our remembering selves and the experiencing self that does our living is a stranger to us!" We are creating stories all the time and remember our lives as a narrative! We want to remember ourselves as heroes and obviously want a good ending to our story. In doing this, we end us neglecting the duration of our experiences and often only remember the peaks or the highs and the endings! Our mind makes choices based on our memories and hence our past learning may only help us in making better future memories and not necessarily better future experiences!
My imperfect brain is now tired and shall not intelligibly be able to talk about the other book! So let us leave the history of humankind to a future blog post.
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