Behind and beyond a shared definition of ecological rationality: A functional view of heuristics

Abstract

Observing human behavior in laboratories reveals time and again the undeniable existence of social components at work even in the isolation of carefully designed experiments. Social and cultural constructs are clearly parts of the environment that shape human cognition. The study of ecological rationality recognizes the importance of specifying these and other characteristics of the environment as a basis for cognition. In this paper, we juxtapose the views of the founders of two leading research programs focused on ecological rationality, one in economics and one in psychology. Based on the written work of Vernon Smith and Gerd Gigerenzer, and on interviews conducted by one of the authors, this article brings together for the first time the essence and principles of the study of ecological rationality in these two traditions. This conjoint presentation poses important questions and clarifies methodological challenges in acquiring understanding of actual human behavior through experimental data. Smith sees ecological and constructivist rationality as two complementing versions of economic rationality, while Gigerenzer explores real-world rationality by studying fast-and-frugal heuristics. Drawing a connection between forms of rationality and emergence of experimental knowledge, we note that a theory of behavior cannot be deduced from observations alone. Establishing a theoretical framework for observed behavior starts with a search for norms that are sensitive to the context and content of the situation in which a choice is made. Studying the ecological rationality of heuristics, markets, and institutions reveals such norms.