Posts in Category: paper

paper := journal article or paper in peer-reviewed conference proceedings

Paper: Rational task analysis (RTA)

Just as a scissors cannot cut paper without two blades,
a theory of thinking and problem solving cannot predict behavior
unless it encompasses both an analysis of the structure of task environments
and an analysis of the limits of rational adaptation to task requirements.
(Newell & Simon, 1972, p. 55)





Hansjörg Neth, Chris R. Sims, Wayne D. Gray

Rational task analysis: A methodology to benchmark bounded rationality

Abstract:  How can we study bounded rationality?  We answer this question by proposing rational task analysis (RTA)—a systematic approach that prevents experimental researchers from drawing premature conclusions regarding the (ir-)rationality of agents.  RTA is a methodology and perspective that is anchored in the notion of bounded rationality and aids in the unbiased interpretation of results and the design of more conclusive experimental paradigms. 

Paper: Heuristics for financial regulation

It simply wasn’t true that a world with almost perfect information
was very similar to one in which there was perfect information.
J. E. Stiglitz (2010). Freefall: America, free markets,
and the sinking of the world economy, p. 243



Hansjörg Neth, Björn Meder, Amit Kothiyal, Gerd Gigerenzer

Homo heuristicus in the financial world: From risk management to managing uncertainty

Abstract: What — if anything — can psychology and decision science contribute to risk management in financial institutions? The turmoils of recent economic crises undermine the assumptions of classical economic models and threaten to dethrone Homo oeconomicus, who aims to make decisions by weighing and integrating all available information. But rather than proposing to replace the rational actor model with some notion of biased, fundamentally flawed and irrational agents, we advocate the alternative notion of Homo heuristicus, who uses simple, but ecologically rational strategies to make sound and robust decisions. Based on the conceptual distinction between risky and uncertain environments this paper presents theoretical and empirical evidence that boundedly rational agents prefer simple heuristics over more flexible models. We provide examples of successful heuristics, explain when and why heuristics work well, and illustrate these insights with a fast and frugal decision tree that helps to identify fragile banks.  We conclude that all members of the financial community will benefit from simpler and more transparent products and regulations.

Paper: Foraging for alternative options

Should I stay or should I go now?
If I go there will be trouble,
and if I stay it will be double…
The Clash

Hansjörg Neth, Neele Engelmann, Ralf Mayrhofer

Foraging for alternatives: Ecological rationality in keeping options viable

Abstract:  Do we invest irrational amounts of effort into keeping options viable, or do we manage available and threatened options in an adaptive fashion? 

Paper: Social influence and collective opinion formation

The rule is perfect: in all matters of opinion our adversaries are insane.
Mark Twain, Christian Science (1907, Book 1, Ch. 5)




Mehdi Moussaïd, Juliane E. Kämmer, Pantelis P. Analytis, Hansjörg Neth

Social influence and the collective dynamics of opinion formation

Abstract:  Social influence is the process by which individuals adapt their opinion, revise their beliefs, or change their behavior as a result of social interactions with other people. In our strongly interconnected society, social influence plays a prominent role in many self-organized phenomena such as herding in cultural markets, the spread of ideas and innovations, and the amplification of fears during epidemics. Yet, the mechanisms of opinion formation remain poorly understood, and existing physics-based models lack systematic empirical validation. Here, we report two controlled experiments showing how participants answering factual questions revise their initial judgments after being exposed to the opinion and confidence level of others.