Bryan Caplan wrote:
>At least on my reading, a lot of cognitive psychologists want to say
>more than "People occasionally reason imperfectly, and policy might
>improve on that." Rather, they are saying "We now know that human
>judgment is quite poor, and economic models that presume otherwise are
>kind of stupid." Of course, it depends on who you read, but I think
>this triumphalist message appears in Nisbett and Ross, Kahneman and
>Tversky, Thaler, Rabin, and others. These guys rarely stray into
>policy, but they clearly think their work is cosmically important.
Bryan calls attention to the issue of how large or frequent are
cognitive errors, suggesting that standard economic analysis is
reasonable when they are rare or small.
To me the central issue is instead human meta-rationality. If cognitive
errors make workers sometimes miss-estimate the safety of a job, but
workers realize that they might make such errors, then wiser-than-thou
academics just need to *tell* workers that their particular job is
more or less safe than they realize, and that should fix the problem.
If people have time-inconsistent preferences, but realize this fact,
then it can be enough to give them means to commit to future choices.
If people can neglect possible ways a contract can go bad, but realize
this fact, they can give arbitrators discretion to deal with this when
settling contract disputes.
In contrast, those who see large policy implications from imperfect
reasoning tend to assume that people are not meta-rational. This may
be true, but most of the evidence presented just show cognitive errors,
and is silent on the issue of meta-rationality.
Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323
