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Overcoming Bias Commenter's avatar

Ben,

One area in which I've done research is on the effects of incentives for increasing participation in surveys. We estimate the effects to be a few percentage points in participation. This is a classical example of an incentive: you pay people and they're more likely to do something.

Joseph and Sam,

To me that just sounds like circular reasoning. All behavior is then rational and incentive-driven, in which case the concepts of rationality and incentives have been drained of all meaning.

Umm, here's the definition of incentive from dictionary.com: "something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity." I think there has to be some "something," not just a warm feeling. For example, when people talk about giving incentives to kids to get better grades, they're talking about money, or gas in their cars, or whatever, not just that warm feeling.

To get back to the original blog entry, I can't stop you from saying that rationality is "simply that people respond to incentives." To me, though, that simply removes much of what is distinctive about rational thinking, and much of what is distinctive about incentives, and makes these into empty universal concepts that describe all behavior.

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Overcoming Bias Commenter's avatar

In teaching economics I always bring up the problem of the Rational Actor. Any model of behavior in economics depends on the principle. As an extreme case I introduce a problem: There is a woman who abandons her very young children for a few days while she parties with friends. Most students cannot accept that her actions are rational. They confuse "reasonable" with "rational." ("Reasonable" always has a moral dimension to it -- thus it can be used in law.) But her actions are rational in that she has weighed ( implicitly ) her returns from being a responsible mother against her returns from being a party girl and found higher returns in her partying. This can, of course, be seen in terms of incentives: her basic incentive structure is to seek returns/pleasures; over the short-term ( and probably the limit of her horizons anyway) her incentive for partying is greater than her more complicated and time-bound incentive as nurturer and mother. This framework can be extended to narcotics abusers, the Manson family, etc.

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