Gerd Gigerenzer is Director of the Harding Center for Risk Literacy at the Max Planck Institute for Human Development in Berlin. 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. He is also Batten Fellow at the Darden Business School, University of Virginia, and Fellow of the Berlin-Brandenburg Academy of Sciences and the German Academy of Sciences. Awards for his work include the AAAS Prize for the best article in the behavioral sciences and the Association of American Publishers Prize for the best book in the social and behavioral sciences.
Decision Making Under Uncertainty: Homo Heuristicus
Should risk and uncertainty be differentiated? In this talk, I will explain why the answer is “yes”: The best decision in situations of known risks is not necessarily the best one under uncertainty. What then defines “rational” decision making under uncertainty? In answer to this I will provide an introduction to the study of Homo heuristicus, which includes a research agenda driven by three questions. The first is descriptive: What are the heuristics in the adaptive toolbox of a species, an organization, or an individual, and how do people choose between heuristics? The second is normative: In which situations is a heuristic better than a complex strategy? This question entails the study of the ecological rationality of heuristics. The third concerns intuitive design: How can systems be designed that help experts and laypeople make better decisions, be it in developing simple rules for safer financial regulation or improving medical diagnosis? The methodological tools are threefold: formal models of heuristics (instead of vague labels such as “System 1”), competitive testing of heuristics against complex strategies (instead of null hypothesis testing), and tests of the predictive power of heuristics (instead of data fitting). These tools also help to overcome earlier misconceptions of heuristics as biases.