Marketing Thought

The Problem with Lay Rationality

I haven’t written about rationality for a while but I’ll return to note a recent paper by Xilin Li and Christopher Hsee. In it they look at the impact of lay views of rationality and raise a problem with such lay rationality. It is a fun paper and, broadly speaking, I agree that their conclusion has validity.

Lay Rationality And Economic Decision Making

The authors’ basic idea is that when you tell people to focus on rational decision making they look for economic and objective reasons. These are termed ‘cold’. These contrast with more feeling based, subjective, ‘warm’ reasons. The challenge is that these cold reasons aren’t necessarily what make people happy. The authors suggest the lay view of rationality, cold decision making, contrasts with true rationality. (Which they call Benthamian-Kahnemanian rationality. Got to say that isn’t as catchy as it could be.) True rationality that involves maximizing utility. Such rules make the decision maker happy, in a broad sense of happiness.

Slight Quibbles

Occasionally I wasn’t totally on board with their tests. The economic reasons they gave seemed to include the original (i.e. pre-sale) price. I think many would argue this should be an irrelevant point in economic decision making. As such it isn’t surprising that considering this leads to bad decisions. They also seem to suggest that rating twice as many pictures is the same effort as rating half as many. I think in practical terms they are approximately right – neither was especially arduous – but technically their definitions could be tightened. They also suggest that there are real-world consequences for the decisions in their experiment. Let me just say that the real-world consequences didn’t look especially consequential to me. (For more on stakes see here.)

Still I Agree With Their Concerns That There Is A Problem With Lay Rationality

That said, I don’t want my relatively minor concerns to detract from the fact that I believe their main point. I worry that people think rationality is about doing certain things that fit with their ideas of (often economic) decision making rather than using the most appropriate decision-making process.

Want To Or Should Do? The Problem With Lay Rationality

This can in certain circumstances lead to poor decisions, (not surprisingly where subjective feelings determine happiness). As the authors say:

“Practically, the present research cautions people that the age-old and widespread advice to be rational in decision-making can be counterproductive, leading decision makers to sacrifice their happiness with no real benefits.”

Xilin Li and Christopher Hsee, 2019, page 122

Read: Xilin Li and Christopher K. Hsee (2019) Being “rational” is not always rational: Encouraging people to be rational leads to hedonically suboptimal decisions, Journal of the Association of Consumer Research (JACR), 4 (2), pages 115-124

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