The Bias Bias in Behavioral Economics
By Gerd Gigerenzer. Review of Behavioral Economics, 2018
143 citations recorded by the source corpus.
Behavioral economics began with the intention of eliminating the psychological blind spot in rational choice theory and ended up portraying psychology as the study of irrationality. In its portrayal, people have systematic cognitive biases that are not only as persistent as visual illusions but also costly in real life—meaning that governmental paternalism is called upon to steer people with the help of “nudges.†These biases have since attained the status of truisms. In contrast, I show that such a view of human nature is tainted by a “bias bias,†the tendency to spot biases even when there are none. This may occur by failing to notice when small sample statistics differ from large sample statistics, mistaking people’s random error for systematic error, or confusing intelligent inferences with logical errors. Unknown to most economists, much of psychological research reveals a different portrayal, where people appear to have largely fine-tuned intuitions about chance, frequency, and framing. A systematic review of the literature shows little evidence that the alleged biases are potentially costly in terms of less health, wealth, or happiness. Getting rid of the bias bias is a precondition for psychology to play a positive role in economics.
Subfields: Finance, General Decision Sciences, Management Science and Operations Research
View Paper: https://www.semanticscholar.org/paper/9b9657e92c97aec3d1c08d5ddb4cd6d2cc5d439b
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Citations in the corpus
- Top Ten Behavioral Biases in Project Management: An Overview (2021, background): “…rates or the stock market had better be overconfident; otherwise few would buy their advice,” argues Gigerenzer, who further observes about this fundamental confusion of one type of bias for a completely different one that, “[c]onceptual clarity is desperately needed” (Gigerenzer, 2018, p. 324).”