Rational Choice in an Uncertain World

The Psychology of Judgment and Decision Making

by Reid Hastie and Robyn M. Dawes

Sage Publications, 2001, ISBN 0-7619-2275-X

Review by Keith S. Harris, Ph.D. on 9 February 2002

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This book should be prefaced with the following warning:

CAUTION: Using the information contained in this book could result in changes in your life.

For many years I've kept a well-worn copy of the first (1988) edition of this book within ready reach in my study's closest bookshelf. Unlike the majority of books in my bookcases, this one clearly shows the passage of time - - its edges are tattered and its pages are marred with washed-out streaks of green and yellow highlighter.

The fact is, at times I find the uncertain nature of the world especially frustrating, and Dawes' book has been my primer in trying to learn better ways to maneuver through the minefields of illogic and irrationality in our society, and in trying to make sense of the illusions and deceptions (both unintentional and intentionally-produced) of the carnival show that is our everyday lives.

The first edition of the book was very well received in professional and academic communities, and received the 1990 William James Award from the American Psychological Association's Division One. That edition has been long out of print, however, and used copies are only occasionally available from book dealers. (Apparently very few people desire to part with their copies.)

So it was very good news a year or so ago when I learned from Prof. Dawes about plans for the publication of this new edition.

However, I was surprised and impressed to find that while this current book preserves the title as well as the theme from its forerunner, it is actually a completely new formulation of the subject; it is not just a "new edition" but a new work that, while incorporating much from the previous book of the same title, covers new ground. In this new book, Robyn Dawes (who was sole author of the first book), is joined by Reid Hastie, another widely recognized authority on human decision-making processes.

In characteristic directness, the authors of this fast-paced but thorough book state their basic premise on the very first page:

Humans evolved from ancestors . . . who lived in small groups and spent most of their waking hours foraging for sustenance. When we weren't searching for something to eat or drink, we were looking for safe places to live, selecting mates, and protecting the offspring from those unions. Our success in accomplishing these "survival tasks" did not arise because of acute senses or especially powerful physical capacities. We dominate this planet today because of our distinctive capacity for good decision making. (p. 1)

But the reader soon learns that, ironically, humans weren't designed to be especially good decision makers in the kind of world in which we now live. The kinds of errors we make aren't random but are instead systematic and even predictable. Fortunately, with a little effort we can learn decision-making skills that are more useful and effective for the situations in which we now find ourselves.

The authors' familiarity with the professional literature shines through in every chapter. The initial chapter addresses the process of thinking, differentiates between automatic and "controlled" thinking, describes the computational model of thinking, and points out the limitations of a strict behaviorist approach to human thought and activities. The study of decision-making processes is traced from the renaissance period up to present day. Subsequent chapters consider the cognitive processing that follows from the basic perception of sensory data, the roles and influence of emotions, attitudes, and values in decision-making, and presents an outline of a rationality-based decision-making process.

The reader is continually reminded that while every normally functioning human being thinks, not everyone thinks rationally, logically, scientifically, or effectively. As mentioned above, "objective" decision-making is a skill that needs to be learned. Humans have innate mental tendencies and biases that are in large part due to our mental apparatus and therefore to our evolutionary past. These natural biases are presumed to be universal and transcultural, deriving from neural circuitry. (The focus of this book is not on the predispositions and biases that are due to our own individual natures and personalities, or the biases and tendencies that arise from the social attitudes and other influences of the various cultures in which we are reared.)

One example of a natural or innate tendency is that we see order or patterns in the world even when no pattern in fact exists. The "coin toss" experiment demonstrates this. Ask someone to simulate (in their mind, without using coins) a number of tosses of a fair coin, and to record the results of each (mental) toss as either heads or tails. Most people will produce records that show much more regular variation (as in H-T-H-T-HH-TT, etc.) than is produced by actual coin tossing. In other words, we have an innate tendency to (unconsciously) project onto the world much more regularity than is actually present in it. We tend to see patterns where there are none.

Among the other fundamental (and numerous) irrationalities explained and demonstrated in this book are "honoring sunk costs" and ignoring the base-rates of phenomena when predicting outcomes.

This book should be required reading for all college students. Even high schools should offer courses explaining at least the most basic of the principles covered in this book. And if executives and business managers were required to master the knowledge contained in this book, who knows how much more smoothly our economy would run?

Of course, many politicians, advertisers, salespersons, and noisy advocates of various kinds would prefer that no one read this book. That should be recommendation enough!