Ecological rationality

Ecological rationality is a particular account of practical rationality, which specifies the norms of rational action – what one ought to do in order to be rational. The presently dominant account of practical rationality, rational choice theory, maintains that practical rationality consists in making decisions in accordance with certain rules, irrespective of context. Ecological rationality, in contrast, claims that the rationality of a particular decision depends on the circumstances in which it takes place. What is considered rational under the rational choice account thus might not be considered rational under the 'ecological rationality' account, and vice versa. Ecological rationality is a particular account of practical rationality, which specifies the norms of rational action – what one ought to do in order to be rational. The presently dominant account of practical rationality, rational choice theory, maintains that practical rationality consists in making decisions in accordance with certain rules, irrespective of context. Ecological rationality, in contrast, claims that the rationality of a particular decision depends on the circumstances in which it takes place. What is considered rational under the rational choice account thus might not be considered rational under the 'ecological rationality' account, and vice versa. Ecological rationality challenges rational choice theory (RCT) as a normative account of rationality. According to rational choice theory, an action is considered rational if the action follows from preferences and expectations that satisfy a set of principles. These principles are often justified based on consistency considerations – for example, intransitive preferences and expectations inconsistent with available information are ruled out. Rational choice theory therefore cashes out practical rationality as the optimal path of action given one's subjective representation of reality. Since the second half of the 20th century, a body of research documented a collection of systematic violations of the principles of RCT. These violations are widely interpreted as demonstrations of irrationalities in human behavior. In contrast, the notion of Ecological Rationality questions the normative validity of RCT and therefore interprets the empirical findings in fundamentally different way. Gerd Gigerenzer argues that some observed behavior, although violating RCT principles, might be rational in environments with specific characteristics. That is, one ought to violate the principles of RCT in order to act rationally in these environments. This idea, that the rationality of an action not only depends on internal criteria (e.g., preference consistency) but also on the structure of the environment, was proposed earlier by Herbert A. Simon. Simon envisioned rationality as being shaped by a pair of scissors that cuts with two blades – one representing the structure of the task environment, the other the computational capacities of the agent. To illustrate, consider the take-the-best heuristic, which can be used for finding the best options from a set of two according to some criterion. Rather than considering information about all attributes of each option, the heuristic uses only information on the most valid attribute (i.e., the attribute correlating the highest with the criterion) that discriminates between different options and chooses the option favored by this one attribute. Thus, it does not form expectations integrating all available information, as required by RCT. Nonetheless, it was found that the take-the-best heuristic can yield better choices than other models of decision-making including multiple regression that considers all available information. The success of this strategy, however, depends on specific characteristics of the choice environment: When information is scarce, validities of the attributes vary highly, and a large portion of attributes is redundant, the take-the-best heuristic is preferred. For a second example, consider the question of how to distribute an investment over several investment options. According to the 1/N heuristic, also called Naive Allocation, agents simply allocate shares of equal size to each investment option. In contrast to the prescriptions of RCT, it does not consider any of the available information, nor does it generate a preference ranking of the available options. When the choice environment is characterized by high predictive uncertainty, a large set of investment options, and limited information about past performance, no rational choice model was found to consistently outperform the 1/N heuristic on a variety of indicators. Given these and other examples, it seems reasonable to conclude that one ought to predict or choose according to these heuristics rather than according to RCT principles in these environments. Lists of environment characteristics affecting strategy performance have been proposed. They include uncertainty, the number of alternatives, sample size, redundancy, and variability.