*Cancelled* – to be rescheduled | EP Seminar - Gerd Gigerenzer
*Cancelled* - to be rescheduled | Homo Heuristicus: Decision Making under Uncertainty
*Cancelled* – to be rescheduled | EP Seminar - Gerd Gigerenzer
21 Jan 2025, 16:30 – 17:30
Abstract: In well-defined situations with known risks, the axioms of classical decision theory can provide a framework for optimal decision-making. However, when Savage introduced his axioms, he clarified that they apply to situations involving risk but not to those characterized by uncertainty or intractability. Uncertainty refers to ill-defined scenarios where the exhaustive and mutually exclusive set of future states of the world and their outcomes are either unknown or unknowable. Intractability, on the other hand, pertains to well-defined but overly complex situations, such as chess, where finding optimal solutions is impractical. While thinkers such as Knight, Keynes, and Simon had drawn similar distinctions, most theories have traditionally reduced uncertainty and intractability to risk, such as by using second-order probabilities, equal priors, or Bayesian subjective probabilities.
In contrast, I advocate for a genuine theory of decision-making under uncertainty, rooted in the empirical study of decision-making under uncertainty. This approach focusses on three core research areas. The first is descriptive: What heuristics are available in the adaptive toolbox of individuals and organizations, and how do they select between them? The second is prescriptive: Under what conditions do heuristics outperform more complex strategies, and when do the latter succeed? This line of inquiry, known as the study of ecological rationality, examines the alignment between decision-making strategies (heuristic or complex) and the structure of environments. The third area is engineering and intuitive design: How can we create heuristic systems that empower both experts and non-experts to make better decisions?
To advance this agenda, three methodological tools are essential: formal models of heuristics (move beyond vague terms like "System 1 thinking"), competitive testing of heuristics against complex strategies (instead of relying on null hypothesis testing), and assessing the predictive power of heuristics (rather than just fitting them to existing data). Through examples from finance, management, and sports, I demonstrate conditions under which heuristics can predict as accurately but more efficiently than complex strategies. Less can be more.
Zoom Link: https://ucl.zoom.us/j/98480649024?pwd=Z1RJGz7SkkjxguXb2XqSjHtDN8xS1W.1
Meeting ID: 984 8064 9024
Passcode: 297418
Host: Dave Lagnado
Gerd Gigerenzer
Max Planck Institute for Human Development, Berlin
Gerd Gigerenzer, long-time director at the Max Planck Institute for Human Development, is director of the Harding Center for Risk Literacy at the University of Potsdam, and vice-president of the European Research Council (ERC). He is former Professor of Psychology at the University of Chicago and John M. Olin Distinguished Visiting Professor, School of Law at the University of Virginia. In addition, he is member of the Berlin-Brandenburg Academy of Sciences and the German Academy of Sciences, and international member of the American Academy of Arts and Sciences, the American Philosophical Society, and the British Academy. He was awarded honorary doctorates from the University of Basel, the Open University of the Netherlands, and the University of Southampton, and is Batten Fellow at the Darden Business School, University of Virginia. Awards for Gigerenzer’s work include the AAAS Prize for the best article in the behavioral sciences, the Association of American Publishers Prize for the best book in the social and behavioral sciences, the German Psychology Award, and the Communicator Award of the German Research Foundation. His award-winning popular books Calculated Risks, Gut Feelings, Risk Savvy, and How To Stay Smart In A Smart World have been translated into more than 20 languages. His academic books include Simple Heuristics That Make Us Smart, Rationality for Mortals, The Intelligence of Intuition, and Bounded Rationality (with Reinhard Selten, a Nobel Laureate in economics). Together with the Bank of England, he is working on the project “Simple heuristics for a safer world.” He has trained U.S. federal judges, German physicians, and top international managers in decision making and understanding risks and uncertainties. The Swiss Duttweiler Institute has distinguished Gigerenzer as one of the top-100 Global Thought Leaders worldwide.