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Better than Rational: Evolutionary Psychology and the Invisible Hand

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Leda Cosmides; John Tooby

The American Economic Review, Vol. 84, No. 2, Papers and Proceedings of the Hundred
and Sixth Annual Meeting of the American Economic Association (May, 1994), 327-332.

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Fri Sep 10 17:38:04 2004
Better than Rational:
Evolutionary Psychology and the Invisible Hand

Several years ago, we attended an inter- Gigerenzer, 1991). And for the many behav-
disciplinary seminar on what were pur- ioral domains where standards of rationality
ported to be "biases" in negotiation be- are unclear or undefined, economics is
havior. The economists, psychologists, and presently mute.
biologists present were mulling over the data From a broader scientific perspective, this
when, suddenly, a prominent economist lit formulation is decidedly odd. Rational be-
up. "Ah, I see,'" he said, "behavior is either havior is not, in any sense, the state of
rational or it's psychological." nature. Not behaving at all is the state of
This formulation stuck in our minds, be- nature in a universe that includes lifeless
cause it seemed to succinctly give voice to a planets, prebiotic soup, mountains, trees,
tacit assumption held by many economists and tables. All departures from this state of
-one that we think works to the detriment inaction require explanation. Moreover, the
of economics, by isolating it from the rele- behavioral repertoires of various animals
vant parts of biology, psychology, and the differ profoundly from one another, and
rest of the natural sciences. This assump- this must be explained as well: bats cannot
tion is that rational behavior is the state of speak, and we cannot navigate through
nature, requiring no explanation. Explana- echolocation. Humans and other animals
tions that invoke the cognitive processes reason, decide, and behave by virtue of
that actually generate human choices are computational devices embodied in neural
required only when behavior deviates from tissue. Therefore, a complete causal expla-
this state of nature. In this view, economics nation of any behavior-rational or other-
is grounded in assumptions of rational be- wise-necessarily invokes theories about the
havior, is theoretically constructed out of architecture of these computational devices.
what logically follows from assuming ratio- The rationality of a behavior is irrelevant to
nal behavior, and gains specificity by plug- its cause or explanation.
ging in a variety of variables that are kept Every economic model entails theories
exogenous to economics, such as prefer- about these computational devices, but they
ences. Merchants of the ad hoc and exoge- are usually left implicit, buried in the as-
nous, psychologists are called in only to sumptions of the model. At the moment,
provide second-order corrections to eco- most economists rely on the implicit (and
nomic theory, usually by furnishing a cata- somewhat vague) theory that these compu-
log of oddities and quirks in human reason- tational devices somehow embody "rational"
ing (e.g., "biases" and "fallacies"-many of decision rules. But developing a more accu-
which are turning out to be experimental rate, useful, and well-defined substitute for
artifacts or misinterpretations; see G. this black box is now a realistic goal. Results
from the newly emerging field of evolution-
ary psychology suggest that (i) explicit,
well-specified models of the human mind
*Department of Psychology, University of Califor- can significantly enhance the scope and
nia, Santa Barbara, CA 93106, and Department of specificity of economic theory, and (ii) ex-
Anthropology, University of California, Santa Barbara, plicit theories of the structure of the human
CA 93106, respectively. For enlightening discussions, mind can be made endogenous to economic
we warmly thank Gerd Gigerenzer, Robert Nozick, models in a way that preserves and expands
and Paul Romer. For financial support, we are grateful
to the McDonell Foundation and NSF Grant No. their elegance, parsimony, and explanatory
BNS9157-449 to Tooby. power.
327
328 AEA PAPERS AND PROCEEDINGS MAY 1994

At present, economics hovers, scientifi- of relationships that link inputs to outputs,


cally unsupported and isolated in mid-air, can deduce the structure of a computer
theoretically levitating on the assumption of program. Hence cognitive scientists can ask:
rationality. But this is unnecessary and lim- do our brains embody procedures that carry
iting. There are tight causal and analytic out the rules of logical inference? or calcu-
connections between economics, psychol- late Bayesian probabilities? or cause us to
ogy, and evolutionary biology (Tooby and avoid incest? or allow us to echolocate?
Cosmides, 1992a): Of course, the information-processing
structure of the mind is fantastically com-
1. Natural selection-an invisible-hand plex, so conducting experiments blindly,
process-is the only component of the without knowing what to look for, has not
evolutionary process that produces com- been an efficient research strategy. This is
plex functional machinery in organisms, where the integration of evolutionary biol-
such as the vertebrate eye (Richard ogy and cognitive science has proved so
Dawkins, 1986). useful. The applicability of evolutionary bi-
2. Natural selection built the decision-mak- ology is based on a simple but powerful
ing machinery in human minds. idea. Form follows function: the properties
3. This set of cognitive devices generates all of an evolved mechanism reflect the struc-
economic behavior. ture of the task it evolved to solve.
4. Therefore, theories of economic behav- This approach has teeth because there is
ior necessarily include theories about the only one class of problems that evolution
structure of the cognitive mechanisms produces mechanisms for solving: adaptive
that generate that behavior. Moreover, problems. These are problems that recurred
the design features of these devices de- across many generations during a species'
fine and constitute the human universal evolutionary history, and whose solution
principles that guide economic decision- statistically promoted reproduction in an-
making. cestral environments. By identifying and
modeling the adaptive problems humans
In other words, natural selection's invisible faced during their evolution, researchers can
hand created the structure of the human make educated guesses about the designs of
mind, and the interaction of these minds is the complex computational devices the hu-
what generates the invisible hand of eco- man brain embodies, and about many of the
nomics (e.g., Tooby and Cosmides, 1992a): specific design features they required to be
one invisible hand created the other. able to solve these problems. Armed with
these models, researchers can then design
I. Evolutionary Psychology experiments that can detect and map the
features of these complex devices-features
The brain is a complex computational that no one would otherwise have thought
device, a system that takes sensory informa- to test for.
tion as input, transforms it in various ways,
stores it, analyzes it, integrates it, applies 11. A New View of the Mind
decision rules to it, and then translates the
output of those rules into the muscular con- The application of these methods is lead-
tractions that we call "behavior." For the ing to a fundamentally new view of the
most part, humans have no more conscious architecture of the human mind. Previously,
access to the structure of these programs the mind was thought to resemble a gen-
and the decision rules they embody than to eral-purpose computer: initially free of any
the processes through which the kidneys content that had not originated in the senses
select what to excrete. Nevertheless, the and the social world (the tabula rasa as-
structure of these information-processing sumption), and equipped only with a small
programs can be mapped in much the same number of content-independent rules of in-
way that a programmer, by studying the web ference (e.g., rules drawn from logic, mathe-
VOL. 84 NO. 2 INVISIBLE-H AND THEORIES 329

matics, and probability theory, or associa- ral problems is the primary reason why
tive rules). problem-solving specializations were fa-
Converging lines of evidence from an ar- vored by natural selection over general-pur-
ray of disciplines are replacing this view pose problem-solvers. Despite widespread
with a model in which the human cognitive claims to the contrary, the human mind is
architecture resembles a large and hetero- not worse than rational (e.g., because of
geneous network of functionally specialized processing constraints)-but may often be
computational devices. Because biological better than rational. On evolutionarily re-
evolution is a slow process, and the modern current computational tasks, such as object
world has emerged within an evolutionary recognition, grammar acquisition, or speech
eye-blink, these devices are inherited from comprehension, the human mind greatly
the past and remain functionally specialized outperforms the best artificial problem-solv-
to solve the particular distribution of prob- ing systems that decades of research have
lems that were characteristic of humans' produced, and it solves large classes of
hunter-gatherer past, rather than those of problems that even now no human-
the modern world (e.g., habitat selection; engineered system can solve at all.
foraging; social exchange; competition from How can this be? General-purpose sys-
small armed groups; parental care; language tems are constrained to apply the same
acquisition; contagion avoidance; sexual problem-solving methods to every problem
rivalry) (for discussion, see Tooby and and can make no special assumptions about
Cosmides [1992aI). The fact that these de- the problem to be solved. Specialized prob-
vices are (a) specialized rather than lem-solvers are not handicapped by these
general-purpose and (b) specialized to solve limitations. Many facts and relationships
seemingly exotic ancestral problems rather relevant to particular types of adaptive
than all problems, or modern problems, problems were stably true of the world dur-
leads to markedly different sets of predic- ing human evolution (e.g., incestuous mat-
tions about human behavior and decision- ings produced a high proportion of birth
making. In addition, this view implies that defects; human grammars were limited to a
cultural differences are vastly overstated, restricted set of patterns). Natural selection
because beneath existing surface variability could equip humans' cognitive specializa-
all humans share the same of set of prefer- tions with design features and problem-solv-
ence-generating and decision-making de- ing strategies that exploited the presence of
vices. Finally, the tabula rasa assumption is these problem-specific regularities to solve
being discarded: human mental content does particular classes of recurrent problems in
not simply originate in the external world. efficient ways appropriate only to that class.
Specialized mental mechanisms inject re- Triggered by cues that a particular problem
current content into human thought across type has been encountered, a network of
cultures (through privileged hypotheses and dedicated computers can selectively deploy
conceptual primitives, specialized represen- from its large repertoire those specialized
tational formats, privileged preference gen- procedures that are well designed for solv-
erators, e t ~ . ) . ing that particular problem. For the problem
One point is particularly important for domains they are designed to operate o n ,
economists to appreciate: it can be demon- specialized problem-solving methods perform
strated that "rational" decision-making in a manner that is better than rational; that
methods (i.e., the usual methods drawn from is, they can arrive at successful outcomes
logic, mathematics, and probability theory) that canonical general-purpose rational
are computationally very weak: incapable of methods can at best not arrive at as effi-
solving the natural adaptive problems our ciently, and more commonly cannot arrive
ancestors had to solve reliably in order to at all. Such evolutionary considerations sug-
reproduce (e.g., Cosmides and Tooby, 1987; gest that traditional normative and descrip-
Tooby and Cosmides, 1992a; Steven Pinker, tive approaches to rationality need to be
1994). This poor performance on most natu- reexamined (Tooby and Cosmides, 1992a,b;
330 AEA PAPERS AND PROCEEDINGS MAY 1994

Robert Nozick, 1994). (Unfortunately, be- of exchange. Needless to say, a specialized


cause decision theorists and philosophers social exchange logic and associated circuits
have almost equated rational methods with allows gains in trade to be identified by
general-purpose analytic tools, the analysis individuals, trades to be arranged, cheaters
and development of domain-specific meth- to be excluded, and hence markets to
ods has been relatively neglected.) emerge spontaneously (Cosmides and
Tooby, 1992). Equally important, experi-
111. Reasoning Instincts mental evidence suggests that humans have
specialized circuits for understanding
From this perspective, the human mind is threats, as well as recognizing bluffs and
powerful and intelligent not because it con- double-crosses. The ability of humans to
tains general-purpose rational methods (al- understand and properly interpret each
though it may include some), but primarily other's threats also allows and structures
because it comes equipped with a large ar- the emergence of social predators, coercive
ray of what one might call "reasoning in- coalitions, governments, and other extortive
-
stincts." Although instincts are often social arrangements.
thought of as the polar opposite of reason- Moreover, models of bounded rationality
ing, a growing body of evidence indicates and heuristics do not seem to capture accu-
that humans have many reasoning, learn- rately the distinctive organization of human
ing, and preference circuits that (i) are reasoning. Such models were based on plau-
complexly specialized for solving the spe- sible notions of limited processing capacity
cific adaptive problems our hominid ances- (e.g., Herbert Simon, 1956; D. Kahneman
tors regularly encountered; (ii) reliably de- et al., 1982) and seemed to make sense of,
velop in all normal human beings; (iii) devel- for example, the experimentally arrived at
op without any conscious effort: (iv) develop consensus that humans lacked the ability to
without any formal instruction; (v) are ap- do Bayesian reasoning. Recent results from
plied without any awareness of their under- behavioral ecology, however, show that
lying logic; and (vi) are distinct from more bumblebees engage in probabilistic induction
general abilities to process information or that the human brain is considered "too
-
behave intelliaentlv.- In other words. these limited" in capacity to perform (see e.g.,
reasoning, learning, and preference circuits Leslie Real, 1991). This suggested that the
have all the hallmarks of what people usu- artificial nature of the experiments usually
ally think of as "instincts" (Pinker, 1994). conducted might not be triggering latent
They make certain kinds of inferences just competences. As it turns out, although it is
as easy, effortless, and "natural" to humans true that people are bad at calculating the
as spinning a web is to a spider or building a probability of a single event, when probabil-
dam is to a beaver. ities are expressed as frequencies, the stan-
It is important to identify and map these dard "fallacies" and "biases" seem to dis-
specialized computational devices, because appear, and statistically naive subjects
they powerfully shape economic processes behave like good Bayesians (Gigerenzer,
(e.g., by making some social interactions 1991; Cosmides and Tooby, 1994). From an
easy for the participants to understand and evolutionary perspective, this is not surpris-
engage in, and others more difficult to un- ing. Our hunter-gatherer ancestors were
derstand or to successfully navigate). For awash in statistical information in the form
example, humans do not seem to have avail- of the encountered frequencies of real
able on-line circuits that perform many logic events; in contrast, the probability of a sin-
operations (e.g., modus tollens). However, gle event was inherently unobservable to
experimental evidence indicates that hu- them (a single event either happens or it
mans do have evolved circuits dedicated to does not). Natural selection can only be
a more specialized task of equal (or greater) expected to have built mechanisms to
complexity: detecting cheaters in situations exploit information in the form that was
VOL. 84 NO. 2 INVISIBLE-HAND THEORIES 331

regularly available to our ancestors. Such everywhere to find alternative sets of rules
observations have implications about how to be reasonable, depending on how closely
humans process the various forms of infor- their particular economic environment mim-
mation available to them about their eco- ics various Pleistocene ecological condi-
nomic environments and supports the view tions.
that, instead of bounded rationality, hu- For example, humans evolved in small
mans have certain nonconscious natural bands who lived by hunting animals and
competences that are far better than is gathering plant foods. Hunting (in many
presently appreciated. environments) is a high-variance activity, in
which luck plays a major role and individu-
IV. Universal Preferences als run a significant chance of coming back
and "Rules of the Game" empty-handed for several days running. Op-
timality analyses from evolutionary ecology
The most straightforward application of indicate that under circumstances of high
evolutionary psychology to economics in- variance for individual foragers, band-wide
volves the likelihood that the two communi- food-sharing is individually beneficial, a
ties collaboratively might be able to create a form of risk-pooling that smoothes out what
science of preferences (e.g., the session on would otherwise be a feast-or-famine cycle
"Preferences" at the 1994 Allied Social Sci- for individuals and families. Because forag-
ence Association meeting featuring papers ing and sharing decisions are complex adap-
by Gary Becker and Casey Mulligan, Robert tive problems that humans faced for mil-
Frank, and Paul Romer). A psychological lions of years, humans should have evolved
architecture that simply acquired an arbi- cognitive programs specialized for solving
trary set of preferences, provided they were them; and recent evidence from the study of
present in the social environment, could not modern hunter-gatherers suggests that they
have been plausibly produced by the evolu- have. These mechanisms monitor local in-
tionary process (Tooby and Cosmides, formation about factors such as resource
1992a). Instead, evolutionary psychology variance, using it as a "switch" to turn vari-
should be able to supply a list of human ous alternative sharing programs on or off.
universal preferences, and of the proce- These mechanisms should make sharing
dures by which additional preferences are rules appealing in conditions of high vari-
acquired or reordered. Models of such ance, and unappealing when resource ac-
mechanisms should be able to address crual is a matter of effort rather than of
long-standing problems in economics by luck (Cosmides and Tooby, 1992). In other
widening the scope of preferences beyond words, different "rules of the game" can be
the usual notion of goods and services (e.g., triggered in a lawful way by specific kinds of
preferences for participation in coalitions ecological variables.
[Tooby and Cosmides, 19881, for risks as a Knowing that such computational devices
function of sex and age, and even for cer- exist could, for example, serve as the basis
tain "rules of the game" [Cosmides and for deeper and more scientifically satisfying
Tooby, 19921). theories of the conditions under which cer-
Indeed, it is frequently assumed that the tain ideas and ideologies arise and are
rules of economic interaction are the out- maintained (Cosmides and Tooby, 1992).
come of historical processes, created by For example, in the modern world, the op-
"society" or by the action of "visible hands" eration of Pleistocene-forged variance-sen-
-explicit, conscious, human intentions. sitive sharing programs would probably
However, humans' evolved computational make cost-sharing for medical care more
devices may also tacitly supply much of the psychologically appealing than for many
structure of these "games." Indeed, our other goods, because illness is seen to have
evolved psychology may have alternative a large random component. Less obviously,
modes of operation that prompt humans knowing the structure of such cognitive
332 AEA PAPERS AND PROCEEDINGS M Y 1994

devices could help economists understand (forthcoming).


why certain economies grow so slowly. The Dawkins, Richard. The blind watchmaker. New
savings and investment necessary for eco- York: Norton, 1986.
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even when average per capita income is sions Disappear: Beyond Heuristics and
increasing-if there is a substantial amount Biases," in Wolfgang Stroebe and Miles
of effort-independent variance in economic Hewstone, eds., European review of social
welfare (caused, e.g., by political unrest or psychology, Vol. 2. Chichester, U.K.:
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