Learn the fundamentals of the discipline that revolutionized the way of understanding decision making.
The behavioral sciences are a group of disciplines that study the process of information evaluation, decision making and human behavior. They include different areas of study such as psychology, neuroscience, anthropology, sociology, behavioral economics, among others.
In recent years, the most representative disciplines of the behavioral sciences are psychology and behavioral economics. On the one hand, psychology focuses on the study of the mind, behavior and mental processes of people. On the other hand, behavioral economics is born from the integration of psychology and economics, and studies the ways in which people deviate from the normative way of making decisions.
How do psychology and economics come together?
Since the 1950s, different economists have identified flaws in the assumptions of traditional economics and the models used.
Traditional economics assumed that:
Individuals make decisions rationally and logically, always seeking to maximize their utility.
Individuals have full access to relevant information and are able to process it optimally.
Decisions are independent and are not influenced by the way information is presented.
People's preferences and value judgments are stable and consistent over time.
However, humans do not make decisions that way. Herbert Simon proposed that we have "bounded rationality" and that in complex environments and with incomplete information, people make satisfactory rather than optimized decisions. He also showed that human decisions can be influenced by cognitive and environmental constraints.
Also, in the 1970s, Amos Tversky and Daniel Kahneman showed that humans are subject to cognitive biases and systematic errors in their decisions. They pointed out that people often make decisions based on mental shortcuts and thought patterns, rather than a thorough analysis of available information. They showed that the presentation of information can significantly affect people's decisions.
In this way, it was demonstrated that there were flaws in traditional economic models and that the inclusion of psychology allowed for a more accurate understanding of how human beings make decisions.
So how do we make decisions?
Contradicting the assumptions of traditional economics does not mean that humans make bad decisions, it simply means that we do it differently.
Simon proposes that in the face of time constraints, processing capacity, environmental distractions and emotions and thoughts; our mind has a plan to solve these problems: "Satisficing". It is a combination of the words "satisfy" and "suffice," and is a pragmatic approach to decision making, as opposed to seeking the optimal solution. Thus, rather than aiming for perfection in the process and its outcomes, Satisficing focuses on finding solutions that are 'good enough' to achieve the objective.
What cognitive mechanisms make Satisficing possible?
To answer that question, it is essential to know an important concept in the behavioral sciences: The dual system of thinking. In examining how we make decisions, it is crucial to determine whether we are operating with System 1 or System 2.
System 1 and System 2 thinking were popularized by Kahneman in his book Thinking Fast and Slow. This idea proposes that our mind makes decisions using one of two systems of thinking, one fast and one slow.
On the one hand we have System 1. It is fast, intuitive and automatic. It operates with little or no effort and there is no sense of voluntary control, often leading us to 'good enough' solutions without exhaustively analyzing all options. In the context of satisficing, this system could be responsible for quickly identifying an option that meets the minimum criteria. In contrast, System 2 is slow, deliberate and analytical. It is conscious and there is intention in its operation, requiring effort. It is the system we would use if we were looking for the optimal solution. In decision making, this system could be employed to carefully evaluate the options and select the best one.
What tactics do we use when making day-to-day decisions?
When using System 1, which is quite common, people use habits and mental shortcuts or simple and quick decision rules to make decisions. These rules are known as heuristics. For example, a common heuristic is "social validation"; when we don't know what to do, we tend to look at what others are doing and follow their lead. Let's imagine we are in an unfamiliar city and we want to eat, but we don't have the time or the ability to check every option on Google Maps, suddenly we see a restaurant where there is a queue of people and we decide that "if there are so many people, it must be good", so we get in the queue too. We have made a decision using a mental shortcut.
Heuristics are useful tools that have accompanied us generation after generation. However, on many occasions, they are not the most appropriate way to make a decision. When heuristics lead us to make systematic errors, they are known as cognitive biases.
We will learn more about cognitive biases in the next installment.
The article in one paragraph.
Behavioral sciences study how we process information, make decisions and act, combining psychology, behavioral economics and other disciplines. They reveal that, rather than being purely rational, our decisions are often only "good enough" due to time and information constraints, a concept known as "satisficing". The works of Herbert Simon, Amos Tversky and Daniel Kahneman highlight two systems of thinking: the fast and intuitive System 1, and the slow and reflective System 2, which together explain how we resort to mental shortcuts and face cognitive biases.
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