Journal Note. AAS, 20 Sept. 94

Key Behavioral Concepts

1. The multiple self --------------------------------------Elster, Gazzanaga

We will supply a reason for an action, even if action was non-rational and these then become part of our environment.

Self control.(See 5b. below) ------------------------Implied in Skinner

2. Selective Perception: Framing

When is a dollar not a dollar?

3. Group Identity and Integration ----------------------Dawes, Sen, Arrow, Boulding

a. Loyalty---------------------------------------------- Hirschman

Reason for the firm--------------------------------Egidi, Hodgson

The hug------------------------------------------- Boulding

b. Conspicuous consumption ---------------------------Veblen, Leibenstein, Frank, Harris

c. Disappointed? What Next?-------------------------- Hirschman

d. Socialization---------------------------------------Skinner

How do people learn to want to do what they have to do (what they and others expect).

4. Emotions -----------------------------------------------Elster, Frank

Solve the commitment (assurance)problem ------------Frank

Myth to solve the commons problem----------------- Harris, Douglas

Benevolence, malevolence--------------------------- Boulding

(see 2 above).

5. Reinforcement --------------------------------------Skinner, Platt, Harris

a. Change behavior by changing feedback from the environment.

Immediate vs distant reinforcement (procrastination)

Superiority of positive over negative reinforcement & punishment-- Schelling, Akerlof

b. Self-control Elster (Ulyseses & sirens) ---------Thaler and Shefrin

via alteration of reinforcers-------------------- Skinner

6. Bounded rationality ---------------------------------Simon

Decision heuristics compatible with bounded rationality:

a. Lexicographic choice------------------------------Earl

Choice when there are complex features of a single product

b. Melioration -------------------------------------Herrnstein, Thaler

c. SOP's -------------------------------------------Heiner, Simon

d. Pattern recognition---------------------------------- Margolis

Cues and frames

Neural networks ----------------------------------Franklin

e. Mental accounts ------------------------------------Thaler

f. Anchoring availability, representativeness bias-------- Frank, Weber-Fechner Law

7. Calculation (rule governed behavior)

a. Reciprocal altruism pays------------------------------ Axelrod

b. Self control------------------------------------------- Thaler, Platt, Elster, Skinner

The planner and the doer. (see (1) and (5b) above)

c. Accept Leviathan------------------------------------- Olson

d. Neoclassical rationality ------------------------------Becker

Note: Calculation is conscious forward looking while reinforcement is unconscious. In the context of calculation we can speak of institutions altering incentives, but not in the reinforcement context where institutions alter reinforcements which may be unconscious.

8. Cognitive Dissonance --------------------------------------Akerlof

May result in selective perception rather than revision of inconsistent preferences.

(Related to 2.b.)

9. Ideas, language, symbols------------------------------- Douglas

Search for metaphor. Nature is often comforting, but selective perception.

Imagination--------------------------------------------- Earl

10. Preferences are constructed, not merely revealed,

in the value elicitation process.--------------------------Dewey, Littlechild

"Some Learning from Cognitive Science," Ch. 2 from Roger McCain, A Framework for Cognitive Economics, Praeger, 1992.

1. A very limited number of items can be held in short-term memory (7 plus or minus 2). The work space, or processor--if it is distinct from short-term memory--is also quite limited in capacity. The channel by which new items enter into long-term memory is narrow so that only a little can be learned at a time.

2. The mind is a symbolic system.

3. Human information processing is incomplete and biased.

4. Formal logic is not the process of the unaided human mind. Human inference processes tend instead to be processes of plausible reasoning.

5. People seek confirmatory evidence for positions to which they are committed, rather than seek disconfirmatory evidence.

6. In bringing the long-term memory to the aid of mental processing, the human mind tends to rely on models that are quite stereotypical and incomplete. These models or frames are organized into hierarchies of association.

7. In primary processing, the mind tends to choose the frame most readily available which fits the situation and does not compare other alternatives. Search commences only if the primary processing fails. This is our strength and weakness--this quick framing gives us quick, often accurate responses; and yet fails badly in some cases

8. We have a limited attention capacity, so must economize mental energy. Heuristics are simple working rules that economize on cognitive information processing. Heuristics contrast with algorithms which specify actions guaranteed to produce the desired outcome.

9. Problems are grouped by content, not structure. Even when the problems to be solved or the decisions to be made are formally identical, the skills used in the familiar decision problem cannot readily be transferred to the unfamiliar. People are much better able to make relevant distinctions when the context is familiar that otherwise (task specificity). (This course is dedicated to improve our skills in finding common instrumental patterns even when the outer clothing of the problem is different--cognitive science says it won't be easy.)

10. Availability heuristic: The frame of the most recent experience is more likely to be chosen for a new problem than any other. Anchoring and adjustment: early commitment to a particular strategy leads to continued search in the vicinity rather than search for another frame.

If we make errors from inappropriate framing, the effects resemble visual illusions more than computational errors. Many of the errors seems to be errors of false reference. In such cases, correction toward an optimum is unlikely. Cognitive consistency is not objective, but subjective and self-referential.

11. The unaided mind does not cope well with probabilities.

12. Summary: We rely on a cognitive inventory of knowledge structures in long term memory and on the power of human associative retrieval to supplement the shortcomings of short-term memory and information processing. These knowledge structures or frames are heuristics, not as a rule, algorithms. Behavior depends on knowledge structures, in addition to, and independent of, preferences and objective constraints.