Bounded rationality and interaction design

For the first time ever (as far as I know) the Nobel Prize in Economics has been awarded to a Cognitive Psychologist. The work of Daniel Kahneman on how people make decisions has had a major impact on both Economics and Psychology. A graduate course I took on decision-making mostly focused on his work and its critiques. Through a series of innovative experiments, Kahneman & Tversky investigated how people deviate from “rational decision making” using heuristics (short cuts) to make their decisions: (a) people pay attention to some relevant information and ignore other information; (b) are affected by framing (how the information was presented); (c)judge relationships between presented information incorrectly; and (d)ignore base-rates (probability of event happening). (a good book for non psychologists to explore this area is “The Psychology of Judgment & Decision Making“)

Why is this relevant to the design of interactive systems? Many interfaces we create support human decision-making. And a good system should take into account how human beings make decisions. For example, Collaborative Filtering Systems (e.g., Amazon type recommendation system) are typically suited to the idiosyncrasies of human decision-making (though they have nothing to do with Kahneman’s insights). People are used to relying word of mouth, to social filtering of information. And Collaborative Filtering algorithms use this same characteristic to create a new paradigm for finding information online.

I believe that as interfaces continue to evolve one of the major developments will be incorporating an understanding of how people make decisions. This will happen as researchers in Universities launch programs for understanding how bounded rationality helps explain online decision making. Academic research will mostly involve lab-based experiments (in Business Schools, Behavioral Economics and Cognitive Psychology Departments), but will also be aided by server log analysis. Results of such research will ultimately permeate the HCI community and influence the design of ecommerce systems, search interfaces and online auctions etc. (Every once in a while I feel tempted to do such research myself!)

In the meantime here are some links about current research on online decision-making found after some quick googling:
(a) Conference on Online Consumer Psychology
(b) A paper on Consumer Decision Making in Online Environments (pdf)

(c) BOunded Rationality and Satisficing in web-based decisions (JASIST paper)
(d) Emotions in Decision Making (recent research has explored this role)

(Note: CogPrints and is a good sources for online articles on Psychology and Cognitive Science.)

6 thoughts on “Bounded rationality and interaction design

  1. Last week’s New Yorker had an interesting review of Daniel Ellsberg’s new book. He tried to get America out of the Vietnam War by better informing the President, then the people, using confidential documents. But later he realized the imperfect decision making was make not on the basis of imperfect information but of varying belief systems. Good stuff.

  2. I found the article (New Yorker of Nov. 4t). Had known very little about Daniel Ellsberg before. This was fascinating. This sentence was especially great:

    “Hidden within the morally outraged and the civilly disobedient radical, was the soul of a wronged desicion theorist.”

    After some searching, I found that Ellsberg has a weblog (http://www.ellsberg.net/papers.htm)! Thanks for pointing out this article Victor.

    Ellsberg’s experiences show that simply providing all the information is not enough to support rational decision making. The value you attach to outcomes dominates your decision making (Johnson and Nixon stuck to the war because they thought the end result would be advantageous for USA. It did not matter if they received information that suggested that this was not the “rational” decision)

    My question is: In designing decision systems (many interactive systems are decision systems) should we been thinking of “values” users might assign, or should we limit ourselves to providing full information (to the degree possible)

  3. “I found that Ellsberg has a weblog….”

    It’s not really a weblog. It’s just some published articles and some other texts. Interesting anyway.

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