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Reckoning With Uncertainty: Search and Learning

Many human behaviors and interactions—falling in love, interviewing for a job, arguing with a partner, crossing the street—lack a user’s guide detailing possible outcomes and their probabilities. Yet various mental tools are available to help people navigate situations characterized by uncertainty and complexity. For example, decision makers can often considerably reduce uncertainty by searching for pertinent information and learning from it effectively. For Nobel Prize laureate Herbert A. Simon, external and internal search—search in the world and in memory—was perhaps the definitive cognitive process of human “bounded rationality.” We study the rich psychology of the search for information in the world and in memory in our research on the “description‒experience gap”—the robust finding that decisions made on the basis of symbolic descriptions differ systematically from decisions made on the basis of actual experience (Hertwig & Erev, 2009). This “gap” is especially pronounced in the context of rare events, which are given too much weight in decisions from description and too little weight in decisions from experience. 

To gain a better understanding of information search and learning processes, we also apply the principles of ecological rationality. Ecological rationality considers humans in real-life decision environments and asks under which conditions a heuristic or cognitive strategy promises to be successful. The risk‒reward heuristic, for example, allows decision makers to infer unknown probabilities solely on the basis of the magnitude of an outcome. But it only works if there is relationship between the magnitude of an outcome (“reward”) and the likelihood of its occurrence (“risk”). As a rule, this relationship is negative—for example, in the contexts of gambling at the roulette table or horse track or taking out a life insurance policy (Pleskac & Hertwig, 2014): The higher the potential reward, the less likely it is to occur. And decision makers can take advantage of precisely this negative relationship to infer unknown probabilities.

Relationship between the magnitude of an outcome ("reward")
and the likelihood of its occurrence ("risk") in three domains

Relationship between the magnitude of an outcome (“reward”) and the likelihood o
© MPI for Human Development

REFERENCES

Hertwig & Erev, 2009 The description−experience gap in risky choice. Trends in Cognitive Sciences, 13, 517−523.

Pleskac, T. J., & Hertwig, R. (2014). Ecologically rational choice and the structure of the environment. Journal of Experimental Psychology: General, 143, 2000‒2019.