Beyond Rationality: Exploring Willful Human Agency and Decision-Making

This podcast episode features Dr. Richard Robb discussing his book "Willful: How We Choose What We Do," challenging conventional economic theories of human behavior. Robb critiques the dominant rational choice theory, which posits that individuals always understand their preferences and make optimal choices, and also finds behavioral economics, with its focus on systematic errors and biases, to be an incomplete explanation. He argues that while these frameworks offer some insights, they fail to capture the full spectrum of human action, particularly "willful" acts that are neither purely rational nor simply irrational mistakes.

Robb introduces the concept of actions that are "for itself" or "self-justifying," suggesting that some human behaviors are expressions of agency and views, rather than attempts to maximize a utility function or correct a cognitive error. He uses the biblical story of the Good Samaritan to illustrate this, arguing that the Samaritan's lavish attention on one individual goes beyond rational optimization or a mere behavioral bias like salience, instead representing an act of will. The discussion also delves into the philosophical roots of belief formation, drawing on pragmatists like Charles Sanders Peirce and John Dewey, highlighting how beliefs are often fixed to avoid doubt and align with identity, rather than solely based on objective data.

Practical insights emerge from the discussion on institutional decision-making, particularly in finance. Robb explains how institutional investors can be stifled by fear of loss and blame aversion, preventing them from acting on unique opportunities even when individual conviction is high. He cites the example of George Soros's firm, where a culture of freedom from blame, coupled with coaching, allowed for innovation and learning from mistakes. This illustrates the difficulty of transmitting tacit knowledge and changing deeply held beliefs within a collective context, even when interests are aligned.

Ultimately, the episode advocates for a more nuanced understanding of human behavior that embraces complexity and acknowledges the intrinsic human capacity for will. It suggests that reducing all actions to either rational optimization or irrational bias overlooks a fundamental aspect of human agency. The conversation encourages a boundless curiosity to explore dimensions of choice that transcend simplistic models, emphasizing that life and decision-making are far more intricate than any single theory can fully explain, pushing beyond the "quest for certainty" towards a recognition of inherent uncertainty and the power of individual will.

I believe that that was they that we had figured it all out that people made that they understood their preferences that they chose what was best rationally and that if we could pursue that idea relentlessly we could explain everything markets non markets prices of soybeans to who we marry

the idea that we're we're robots but sometimes we're badly programmed his robots just does not fit with my with my image

my project in this book is to show that all some things just don't fit and life is more complicated than that

why does the world have to be just one thing maybe because people were anxious and wanted to cling to one thing until it did not serve them

one of the reasons we fix belief in order to avoid the irritation of doubt is we choose things that are agreeable to reason there the style of thing that we like to believe they fit with our identity they fit with our other beliefs

reason is a slave to passion

I would say it's net neither rational nor irrational it's just for itself it's a self-justifying act and we there's he's acting on the world he's expressing his his views at this moment and there's nothing more to say

these acts of will where we exercise human agency we're not just passive maximizers of some preference function but something that's intrinsically human

if will was just another thing that we tried to maximize then we wouldn't be willful

freedom from blame aversion I think ISM is important for any institution

it's just not the way that people make decisions