INTERSECTION

Limits of Our Mind: Bounded Rationality

by Egemen BÜYÜKKAYA

How rational are we in the modern world? Since the enlightenment, thinkers, and scientists have held the view that humans are rational actors. They thought that humans were, by nature, rational creatures who could make their decisions using their reason. All human beings were considered possessing similar faculties of reason. Some thinkers like Immanuel Kant, have carried this view further by suggesting as all of us have the faculties of reason, we can uniformly decide what is moral and right by establishing universal laws. Even today, in social science theories, rationality has dominantly been assumed. Economics defines the rational person with its profit-maximizing behavior, and much political science and IR theories define states and people as rational actors acting according to fulfill their interests. However, does this big assumption hold in the real world?

 

According to many scientists, the answer is no! The founder of the concept of "bounded rationality," Herbert A. Simon, suggests that our rationality is limited in the presence of scarcity of time and cognitive resources. To define the "boundedly rational" behavior, Simon further indicates that people mostly come up with satisfactory yet biased and even irrational decisions. Additionally, other scholars like Tversky and Kahneman also contemplate that in simple situations, such as solving a simple mathematical problem or fixing furniture, people can act comprehensively rational as their cognitive capacities are not challenged. However, when exposed to complex information environments and severe or conceptual problems, they tend to use shortcuts. Such shortcuts often involve biases and heuristics. For example, when people have difficulties in decision-making, they tend to imitate a significant other's actions. In this respect, Tversky and Kahneman have found several biases and heuristics involved in decision-making that bounds our rationality. 

 

As we have mentioned before, economics relies on the rationality principle more than any other social science discipline. Theories in this field dominantly employ homo economicus as rational actors who are infinitely capable of making rational decisions.(1) In this aspect, economists characterize the rational action purely aiming monetary and non-monetary gains and can come up with consistent and sensible predictions. However, even when we observe our daily-life situations, we can see that we behave beyond the limits of the homo economicus. Given that tastes, preferences, social norms, or peer pressure can go in making profit-maximizing decisions, economists have a tough time predicting humans' behavior.

 

Bounded rationality also has significant implications in political science. Electoral studies are one such area where political scientists focus on human rationality. Rational predictions of election outcomes rarely hold up in real elections where people vote not to their self or the public interest, but mostly through partisanship and amiability. Going even further, sometimes voters could be influenced by unconscious factors such as the halo effect. Halo effect suggests that people tend to favor and love attractive people more, and in the electoral aspect, attractive candidates are more likely to receive more votes. Moreover, in international relations, we mostly assume that states make rational and independent decisions for their best interest. However, wars often reflect boundedly-rational decisions instead of rational ones. We have frequently seen prolonged conflicts and wars in the twentieth and twenty-first century, such as the Vietnam War and the Syrian Civil War. As states invest tremendous resources into armed conflict, it is not easy for them to pull these out when they understand their disadvantageous position in the battle. Thus, the "sunk-cost fallacy" behavior can also be associated with state behavior and the dynamics of international relations.

 

We have talked about how we, as humans and human organizations, go out of the boundaries of our rationality. However, would it be any good if we were to be infinitely and purely rational creatures? This question is tough to answer since we do not have a uniform definition of rationality. In building his theory of "utilitarianism," Jeremy Bentham defines his rational as actions promoting the greatest happiness for the highest number. He posits that we must act to generate maximum total utility in a society with our actions and regulations. While this formulation can make utility for some people, it can also create misery for others. In this view, slavery can be favored as unpaid and infinite labor, and it can generate significant amounts of utility for masters. In the rationality of the utilitarian perspective, a system of slavery can be favored against an egalitarian democratic system as there are little-to-no ethical barriers. Furthermore, the so-called human rationality has produced many evil thoughts in the course of histories such as eugenics or dictatorships. Each of these views, or ideologies, claimed that they had a rational basis.

 

As humans, our minds are much more than a mechanistic definition of rationality, and we cannot mathematically compute what is reasonable and irrational. I certainly support that we should use our reason to the fullest extent by evaluating the complete and right information to the appropriate context. However, I think that we should not forget our human character; we should not see our ethical considerations as bias or a shadow on our rationality. Through our reason and humanity, I believe that the bounds of our minds are blurred and transitory.

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