Of rational and rationalizing actors

rationalization hamsterA central foundation of economics as a field is the rational actor. Homo Econonomicus as it is called is an abstraction that makes much of economic theory possible, through the assumption that humans logically weigh options, utilizing concepts such as marginal utility, taking into account sunk costs and opportunity costs, and countless other principles that together construct the theoretical framework of economics. The homo economicus has no preferences, no bias, make no flaws in their logic and has perfect information. The interesting part of this is that marketing (a sub-field of economics) and economics are at odds, because if humans truly were rational actors, then marketing should have little value outside of being the source of the perfect information. However, if we take a look at marketing, it becomes clear that in marketing informing is a means to an end, the end being persuasion and influence. The model used in economics is one of needs and wants, where a need is a biological urge that needs to be sated and a want is the preferred manner in sating that urge. For instance, thirst is a need, preferring green tea is a want. If the human in question was a rational actor, the way to make such a decision was to weigh all the drink choices, and then make a choice based on the relative merits of each beverage option. These merits could include such categories as flavor preferences, health benefits, health detriments and so on, and thereafter a choice could be made.

However, marketing seeks to override the part of your brain that seeks out information about ways to sate wants, and most frequently seek to appeal to other things than the merits of the product. For instance, Coca Cola is a beverage that contains both caffeine (a diuretic) and salt (makes you thirsty) thus it follows that Coca Cola can not really appeal to its ability to sate the need of thirst. Therefore they focus on emotional connections by being present at places like Disneyland, associations with important times of the year such as Christmas, associations with sports teams, and various other things that have nothing to do with the merit of the product itself.

This creates an interesting situation, if economics is based on humans being perfect data processors, yet marketing is based on humans being imperfect data processors, seeking to take advantage of errors in processing through weaponized bias, furthermore through promotion of brands that take advantage of mental shortcuts such as those outlined by Kahneman. This creates an interesting contraction between the sub-field and the main field. Over time this has slowly permeated through our society, mostly as a result of seeming like a logical and reasonable person has become a status check. Ask even the most irrational ADD laden person you know, and they will tell you how structured, logical and reasonable they are, despite the mountain of evidence that you can marshal when making a counter-argument. If you were to make the counter argument, they would be quick on their feet to either rationalize the evidence and patter of behavior, or to engage in the very irrational behavioral you were pointing out in the first place.

Major Premise: People have a need to appear a given way both to society and themselves.

This is what Heartiste refers to as the “Rationalization Hamster“, the ability of human beings to rationalize whatever they did or want to do. Sam Harris argues in his book on the subject, that human brains make a decision 15 seconds prior to the person actually being aware that the decision has been made [1]. When we add to that the system 1 (automatic, effortless, unconscious)  vs system 2 (Deliberate and conscious, effortful, controlled mental process) concept introduced by Kahneman, which states that many decisions humans make are made through the use of heuristics, and other short-cuts that seek to minimize energy expenditure. His famously uses Dr. Watson (system 1) and Sherlock Holmes (System 2) as examples, points out the major difference. Where System 1 rushes to a conclusion, System 2 slows down, takes in data, and then forms conscious conclusions. When a person is engaging in high investment decision making such as buying a house, they are likely to lean towards system 2 in order to ensure a correct selection, when a person is making a low investment decision such as shopping for groceries, they are likely to be in system 1 mode, relying either on brand or whatever want-based item they see first. The persons who agonize for hours analyzing data on what toilet paper to buy are as rare as the people who decide to buy a house or car on a whim.

A third element is added, the virtual onslaught of biases, fallacies, and errors that exist in human reasoning [3], it follows that even on the best of days humans will engage in actions that are not rational, logical and intelligent. These actions can be anything from engaging in a destruction of shareholder value that is nearly unprecedented since the early 2000s as is the case with Marisa Mayer at Yahoo that her board silently approved of, to Elon Musk, by his success in business and probably the closest the world has to a real world Tony Stark, marrying the same woman twice and having her file for divorce twice. Some things are simply rationalization crack. Both women and men will rationalize behavior in the name of “love“, people will happily rationalize away behaviors, and actions engaged in by those close to them, or ideologies that are central to their identities. An interesting observation here is the string of denouncements from conservatives and progressives against Donald Trump for running a campaign that appeals to people’s emotions. Despite the fact that both camps are guilty of doing exactly that since before the Reagan administration.

However, if you were to ask someone why they just spent $5000 they do not have, making purchases on Black Friday, odds are that they are going to tell you “I actually saved money by spending those $5000, I would have had to pay much more if I’d waited” or some variant thereof. This is part of the brilliance of how sales work.

Black Friday is a brilliant example. It has a short duration and adds a lot of shoppers all going after the same items, thus creating urgency, competition and the illusion of scarcity. This pushes people towards system 1 thinking, thus avoiding a situation where people are actually considering things like long term consequences and whether they can afford something. Secondly, through using discounts and “for limited time only” or “limited amount only” it creates a rationalization for people. They can rationalize to themselves and others that they made the intelligent and fiscally sound decision, through using “It was cheaper than waiting”.

Minor premise 1: People operating on system 1 are easier to influence.

Minor premise 2: Offer people a rationalization.

Minor premise 3: Play on bias and fallacies.

Conclusion 1 (from MP 1 and mp1): People operating on system 1 are likely to act in predictable manners congruent with how they want to appear and view themselves.

Conclusion 2 (from MP 1 and mp2): People will rationalize their behavior if given an opportunity.

Conclusion 3 (from MP1 and mp3): Use bias and fallacies to enable people to appear they way they want.

Conclusion 4 (from MP1 and mp1, 2, 3): Use Bias and fallacies to influence people operating in system 1 to act unpredictable if offered a chance to rationalize non-congruent behavior.

Summary

This post is somewhat complimentary with information gathering and sophism. Once you aware of the irrational nature of humans, and start to view the large influence games through the lens of irrationality, you will discover why they are played based on emotions while providing rationalizations, rather than by strict facts and logical communication. Evangelical apologist William Lane-Craig is an expert at employing these tactics in debates, where his arguments are superficially valid, however depend on various logical fallacies such as equivocation, special pleading or ad hoc. Likewise, the Budweiser commercials that show men drinking Budweiser surrounded by models, are encouraging a connection between drinking lite lager and banging models. Rather than selling their beverage based on its merits as a beer, they are selling an image and a lifestyle to their customers.

This is the same reason why ideology is so powerful, it helps people build their frame of reality. The fact that you support Hillary, Bernie, Cruz or Trump, is both influenced by your existing frame, and your desired frame. I found myself watching “Last Week Tonight with John Oliver” the other night where he presents the following:

Candidates can create feelings -> Feelings = Facts -> Therefore Candidates can create facts. [4]

This is a statement that candidates can create narratives that their followers will accept as true. I suspect this is similar to how authors and directors make a deal with their audience to suspend disbelief when reading fiction or watching a movie. We willfully ignore facts in favor of the narrative, so that Rambo can win against the whole Soviet army. A narrative in the base form is a series of facts explained in the form of a story, however, most people will not take the time to check the facts, they will merely see if the story makes sense and suspend disbelief if facts to the contrary are presented. If the story makes sense, given A, B and C, and B is blatantly false, yet destroys the narrative. People will rationalize that B cannot be false, because the story makes no sense if B is false. It is a perfect case of circular reasoning.

Humans as animals will rationalize why they are doing something, how they selected to do it, and why the outcome was or was not as anticipated. By utilizing story based communication and subtly giving people a way to rationalize their interpretation and their actions, you can convince people of just about anything.

Sources:

[1] Free Will by Sam Harris

[2] Thinking fast and Slow by Daniel Kahneman

[3] The Art of Thinking Clearly by Rolf Dobelli

[4] https://youtu.be/zNdkrtfZP8I

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4 comments on “Of rational and rationalizing actors

  1. Hi, How are you?

    ” People have a need to appear a given way both to society and themselves.”

    I think that it is true and should not be forgotten.

    Would you say that every human is both a rational and rationalizing being?

    Like

  2. […] from the beasts of the earth. As our ability and capacity for reasoning grew larger, our ability to rationalize our observations did as well. Where ancient man, more beast than homo sapiens understood nature […]

    Like

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