Summer Institute 2018 - How Robust Is the Beauty of Simplicity? – Ralph Hertwig

HOW ROBUST IS THE BEAUTY OF SIMPLICITY?
It is almost an article of faith that heuristics impose an accuracy-effort trade-off: The less cognitive effort required by a heuristic, the more compromised is its performance. Yet, there is an alternative, according to which less effort can lead to a better, comparable, or worse performance, depending on the environment in which a heuristic is used—that is, the ecological rationality of strategies. Such demonstrations, however, have predominately focused on inference tasks with undisputed normative benchmarks. Less is known about heuristics’ ecological rationality in two quintessential worlds of economic rationality, preferential choice under uncertainty and strategic choice between agents. In the latter domain, one view is that strategic interaction are much to complex for simple heuristics to work well. This talk will be concerned with both these two domains and discuss if simplicitly in the preditive strategy will fall short of the ideal represented by the optimal model, and if so, how great is the premium one pays for simplicity. Relatedly, are there environmental conditions and properties that are conducive to good performance of simple heuristics in these environments?

RALPH HERTWIG
Ralph Hertwig is the Director of the Center of Adaptive Rationality (ARC) at the Max Planck Institute for Human Development in Berlin (MPIB). Before taking on his role as an MPIB Director in 2012, Hertwig was Professor for Cognitive and Decision Sciences and later Dean of the Faculty of Psychology at the University of Basel.

SUMMER INSTITUTE
The 2018 Summer Institute on Bounded Rationality took place on June 19 – 27, 2018, at the Max Planck Institute for Human Development in Berlin, Germany.