“Efficiently Irrational: Deciphering the Riddle of Human Choice”, 2022-05-25 ():
A central question for decision-making scholars is: why are humans and animals so predictably inconsistent in their choices? In the language of economics, why are they irrational?
Data suggest that this reflects an optimal trade-off between the precision with which the brain represents the values of choices and the biological costs of that precision. Increasing representational precision may improve choice consistency, but the metabolic cost of increased precision is large.
Given the cost of precision, the brain might use efficient value-encoding mechanisms that maximize informational content. Mathematical analyses suggest that a mechanism called divisive normalization approximates maximal efficiency per action potential in decision systems.
Behavioral studies appear to validate this claim. Inconsistencies produced by decision-makers can be well modeled as the byproduct of efficient divisive normalization mechanisms that maximize information while minimizing metabolic costs.
For the past half-century, cognitive and social scientists have struggled with the irrationalities of human choice behavior; people consistently make choices that are logically inconsistent. Is human choice behavior evolutionarily adaptive or is it an inefficient patchwork of competing mechanisms? In this review, I present an interdisciplinary synthesis arguing for a novel interpretation: choice is efficiently irrational. Connecting findings across disciplines suggests that observed choice behavior reflects a precise optimization of the trade-off between the costs of increasing the precision of the choice mechanism and the declining benefits that come as precision increases. Under these constraints, a rationally imprecise strategy emerges that works toward optimal efficiency rather than toward optimal rationality. This approach rationalizes many of the puzzling inconsistencies of human choice behavior, explaining why these inconsistencies arise as an optimizing solution in biological choosers.
[Keywords: decision-making, utility, subjective value, efficient coding, divisive normalization]