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AbstractAxiomatic rationality is defined in terms of conformity to abstract axioms. Savage (The foundations of statistics, Wiley, New York, 1954) limited axiomatic rationality to small worlds (S, C), that is, situations in which the exhaustive and mutually exclusive set of future states S and their consequences C are known. Others have interpreted axiomatic rationality as a categorical norm for how human beings should reason, arguing in addition that violations would lead to real costs such as money pumps. Yet a review of the literature shows little evidence that violations are actually associated with any measurable costs. Limiting axiomatic rationality to small worlds, I propose a naturalized version of rationality for situations of intractability and uncertainty (as opposed to risk), all of which are not in (S, C). In these situations, humans can achieve their goals by relying on heuristics that may violate axiomatic rationality. The study of ecological rationality requires formal models of heuristics and an analysis of the structures of environments these can exploit. It lays the foundation of a moderate naturalism in epistemology, providing statements about heuristics we should use in a given situation. Unlike axiomatic rationality, ecological rationality can explain less-is-more effects (when using less information can be expected to generate more accurate predictions), formalize when one should move from 'is' to 'ought,' and be evaluated by goals beyond coherence, such as predictive accuracy, frugality, and efficiency. Ecological rationality can be seen as a formalization of means–end instrumentalist rationality, based on Herbert Simon's insight that rational behavior is a function of the mind and its environment.

AbstractDespite the ubiquity of uncertainty, scientific attention has focused primarily on probabilistic approaches, which predominantly rely on the assumption that uncertainty can be measured and expressed numerically. At the same time, the increasing amount of research from a range of areas including psychology, economics, and sociology testify that in the real world, people's understanding of risky and uncertain situations cannot be satisfactorily explained in probabilistic and decision-theoretical terms. In this article, we offer a theoretical overview of an alternative approach to uncertainty developed in the framework of the ecological rationality research program. We first trace the origins of the ecological approach to uncertainty in Simon's bounded rationality and Brunswik's lens model framework and then proceed by outlining a theoretical view of uncertainty that ensues from the ecological rationality approach. We argue that the ecological concept of uncertainty relies on a systemic view of uncertainty that features it as a property of the organism–environment system. We also show how simple heuristics can deal with unmeasurable uncertainty and in what cases ignoring probabilities emerges as a proper response to uncertainty.

AbstractStandard evolutionary game theory investigates the evolutionary fitness of alternative behaviors in a fixed and single decision problem. This paper instead focuses on decision criteria, rather than on simple behaviors, as the general behavioral rules under selection in the population: the evolutionary fitness of classic decision criteria for rational choice is analyzed through Monte Carlo simulations over various classes of decision problems. Overall, quantifying the uncertainty in a probabilistic way and maximizing expected utility turns out to be evolutionarily beneficial in general. Minimizing regret also finds some evolutionary justifications in our results, while maximin seems to be always disadvantaged by differential selection.

Abstract
Political scientists have proposed that party cues can be used to compensate for the public's well-documented lack of substantive political knowledge, but some critics have argued that applying party cues is more difficult than assumed. We argue that this debate has proven intractable in part because scholars have used ambiguous normative criteria to evaluate judgments. We use a unique task and clear normative criteria to evaluate the use of party cues in making political judgments among two samples: a sample of state legislators and an online sample of the public. We find that the public sample performs poorly when using cues to make judgments. State legislators make much more accurate judgments on average than even the most attentive segment of the public and are more likely to place less weight on irrelevant cues when making judgments, although there is evidence that both samples performed worse with the inclusion of non-diagnostic cues. We conclude with a discussion of the relevance of the results, which we interpret as showing that party cue use is more difficult than theorized, and discuss some practical implications of the findings.

Abstract
The principles characterizing the traditional revenue-expense approach to accounting cannot be traced back to a distinct event. I argue that they are ecologically rational. Their functionality is the result of cultural evolution, not of unitary human design. This is the reason why the efforts to defend them against the balance-sheet approach endorsed by standard-setters have encountered severe difficulties. Only the latter is clearly based on a coherent model of the economy, namely neoclassical economics. I further argue that a solid basis for explaining the rationale of the culturally evolved accounting principles can be found in behavioral economics. These principles are in line with human behavior as found in numerous laboratory and field experiments. It is especially with respect to Prospect Theory that a close parallel can be identified. I combine this observation with a market process view of the economy. Financial accounting according to the balance-sheet approach does not add new information to the market process; it only summarizes on the firm level information provided by the market. In contrast, the revenue-expense approach provides private information to the market à la Hayek (1945). The revenue-expense approach thus turns out to be congenial to the organization of the market economy.

AbstractOver the past decades psychological theories have made significant headway into economics, culminating in the 2002 (partially) and 2017 Nobel prizes awarded for work in the field of Behavioral Economics. Many of the insights imported from psychology into economics share a common trait: the presumption that decision makers use shortcuts that lead to deviations from rational behaviour (the Heuristics-and-Biases program). Many economists seem unaware that this viewpoint has long been contested in cognitive psychology. Proponents of an alternative program (the Ecological-Rationality program) argue that heuristics need not be irrational, particularly when judged relative to characteristics of the environment. We sketch out the historical context of the antagonism between these two research programs and then review more recent work in the Ecological-Rationality tradition. While the heuristics-and-biases program is now well-established in (mainstream neo-classical) economics via Behavioral Economics, we show there is considerable scope for the Ecological-Rationality program to interact with economics. In fact, we argue that there are many existing, yet overlooked, bridges between the two, based on independently derived research in economics that can be construed as being aligned with the tradition of the Ecological-Rationality program. We close the paper with a discussion of the open challenges and difficulties of integrating the Ecological Rationality program with economics.