Book review: The Choice Factory by Richard Shotton

There are few truly universal books on behavioural science: like most of the others, this one has a particular reader in mind. Richard's reader works in advertising, and it must be a rare advertising executive who still hasn't heard of behavioural economics. Richard therefore heads straight into the meat of the book with little beating around the rational-agent bush. A couple of connected anecdotes start us off and we quickly get to the first of 25 chapters, each on a single bias, that make up the body of the text.

The book is very readable, and even if you already know what the fundamental attribution error, the pratfall effect and Veblen goods are, you'll probably still enjoy the stories and quotes that illustrate them. I hadn't heard of some of the experiments and anecdotes that Rich discusses - and he and his colleagues have carried out many of their own original tests - so even as a professional in the field there is much here that's worthwhile.

Structuring …

A program for cognitive economics

I’m visiting the American Economics Association conference in Philadelphia this weekend and looking forward to catching up with the latest in theoretical and empirical research. Behavioural economics has received another endorsement this year with Richard Thaler’s receipt of the Nobel Prize. The behavioural field still has only a small minority of the conference’s papers, but many more than a few years ago. It finally feels like an accepted part of the broader field.
Echoes of a new discipline have started to emerge. Miles Kimball published a detailed NBER working paper in 2015 that defined cognitive economics as “the economics of what is in people’s minds”. Before that, a book and conference in 2004 discussed the topic, and a few others (including Marco Novarese and myself, here and here) have discussed it in the meantime. It seems that the term has been invented more than once in parallel - the term is after all a natural counterpart to "behavioural" economics.
The field i…

The amoeba and the squirrel

[An essay written for the Internet Review, a one-off maybe-to-become-annual publication documenting (and celebrating?) Internet trends]

Every human has two minds: one like an amoeba and one like a squirrel. The amoeba mind is reactive, emotional, intuitive. It decides immediately, without planning or consideration. It is Freud’s “id”, or the System One of behavioral economics: the amoeba is your unconscious. Your squirrel mind plans, trades off immediate pleasures for future gain, is capable of abstract reasoning and cooperation – the superego.

Being an amoeba is often more fun – maybe even more authentic – but the squirrel makes things happen in the long run.

Society also has amoeba and squirrel modes. The amoeba is the local interaction: follow your senses and do what’s in your direct interest, consequences be damned. Squirrel mode requires bigger institutions, and trust: in other people’s knowledge, a shared logical picture of the world, forgoing today’s profit for society’s long-…

The gender pay gap on Euristica: an imaginary island

I recently gave a talk at TEDxCoventGardenWomen about an economic agent-based modelling system I have built (readers of Thomas Schelling may see some influence). In the talk I use this system to analyse ideas around privilege, prejudice and systemic inequality - and to test some policies that might help to solve the persistent gender and racial pay gaps that we still see in most societies.

The video is below - your thoughts would be very welcome.

Discussion 3 of 3: Lassie died one night

The much-delayed final episode in a short series of posts - part 1 and part 2 here.

Lassie died one night.

As Thomas Schelling* pointed out in a thought-provoking 1982 essay, millions of people watched it happen on television one Sunday evening, and cried. Yet they all knew Lassie was not real – and that the dog who played her was probably in perfect health. Why did they experience the same emotions, the same sense of loss that they would expect to feel if their own dog had died, or even their own grandfather? Why should fictional outcomes and situations provide us with (positive or negative) utility? (And if they do, why can we not simply conjure up unlimited happiness by indulging in films or books that we enjoy and hiding from the world?)

The two hypotheses laid out in the previous posts can provide an explanation not only for this, but for a number of other psychological phenomena:

H1: That potential decision outcomes are automatically evaluated by an associative network representi…

How does it feel to be part of Europe?

I had this piece drafted before the murder of Jo Cox last week. But I don’t think it changes anything I was going to say. It simply makes it more urgent to say it.
May I introduce you to my two lovely young nieces? Natasha is four months old and Rosalind four years. They live in rural Devon, and they’re just starting to discover the world and decide how to feel about it. I want to think a little about what it might feel like to be in their world.
The campaign for Britain to remain in the EU has been full of facts and utilitarian arguments. Economic projections, dispelling of myths about regulations, estimates of the economic and tax contributions made by European workers in Britain. All the kinds of things that may convince you if your inclination is to weigh up the numbers and evaluate the facts.
But there are plenty of people who don’t want to make a decision based on numbers, and I understand that. Numbers can be manipulated. We don’t all have the time or desire to read and check and …

Discussion 2 of 3: No spooky action at a distance - a theory of reward

Part 2 in a short series of posts. Part 1 and part 3 are also available.

One of the most powerful ideas in physics is the principle of locality. This principle insists that objects can only be influenced by other objects that touch them. Two items separated by a distance cannot directly exert any force or influence on each other, but must communicate via some medium which physically transmits the force from one to the other.

Albert Einstein described this principle as "no spooky action at a distance" and it applies to his theory of gravity as well as all the other physical forces (it gets more complicated when we consider quantum mechanics, but that would take a whole other article). The Scottish physicist James Maxwell also used it in developing his theory of electromagnetism.

Instead of the magnets directly pushing or pulling each other, each magnet creates an electromagnetic field, and sends out the field into the world around it, transmitted by light waves. When anothe…