“If you think, you’re dead.” Do you know in which classic movie this is said? My guess is that the academic debates around human decision-making are even less known to the general population than the movie quote. Some of these debates are fascinating – in a different way than the movie I referred to – and somewhat sensitive too. Those who write something about it are at risk of being put into one of at least two camps. I aim to stay as neutral as Switzerland though and am not pretending to be an authority on decision-making. I have been fascinated about it since the game theory classes at Erasmus University Rotterdam a long time ago, and this fascination has evolved. So, here we go.
Two or three
We’ll start with Professor Daniel Kahneman, famous as Nobel Laureate and for his behavioral economics classic “Thinking, Fast and Slow” (2011). In that book he explains the concept, originally developed by psychologists Keith Stanovich and Richard West, that our brain basically has two systems which function distinctively. System 1 decides spontaneously, operates automatically, quickly and does not overthink. System 2 is required for effortful mental activities which take time. It’s evident which brain system takes over, at least temporarily, when you are in acute, time-sensitive situations. For example, when you come too close to a flame and almost burn yourself. Or when you are in a life-or-death situation. System 2 comes into effect when there are many sides to a problem and, importantly, when you have some time to think. That’s the case when you need to plan things: e.g. when I help a client with a strategic plan. Some academics, some of whom I have the pleasure to know, argue that there is a System 3, which is more about the wisdom in feeling and imagining. I like the thinking behind it and respect their research as well, but again: think of me as Switzerland in this field.
Let’s be rational
The debate I want to reflect upon briefly and in a non-academic way, is the one about what rationality actually is. Can we consider rationality to be broader than logical rationality, which is based on analysis and reason? I was inspired by Professor Gerd Gigerenzer’s paper “The rationality wars: a personal reflection”, written in October 2024 but which I only recently noticed; and which clearly builds on his earlier work, which is seminal in my opinion. He argues that in an uncertain world (where people cannot easily assess, oversee or foresee several factors and where historical patterns are of little value), there is rationality in using judgment, intuition, experience, emotion and everything else psychological next to or even instead of logical rationality. He argues that heuristics (rules of thumb aka mental shortcuts) which in mainstream behavioral economics are seen as a source of deviations from rationality, can be regarded as useful and rational, under certain circumstances. How you make decisions and whether that is rational or not depends on the circumstances, is my easy key takeaway from his findings.
Ask yourself
Anyway, I may not be specific enough here for specialized academics, but too much so for readers in general, so let me stop here. I would like to ask you to answer these four questions for me, yourselves and others:
- If you think about a recent important decision you made, to what extent do you think it was based on reason, for example an analysis of pros and cons?
- To what extent was it based on feeling, experience and other factors instead of logic?
- What do you think or how do you feel about the balance between the “logical rational part” and the other part?
- Now that you have given it further thought, do you think you would come to a decision differently next time?