Neuroeconomics is the newest of the economic sciences with a focus on how the embodied human brain interacts with its institutional and social environment to make economic decisions. This paper presents an overview of neuroeconomics methods and reviews a number of results in this emerging field of study.

Commentators agree that simple conclusions about a general base rate fallacy are not appropriate. It is more constructive to identify conditions under which base rates are differentially weighted. Commentators also agree that improving the ecological validity of the research is desirable, although this is less important to those interested exclusively in psychological processes. The philosophers and ecologists among the commentators offer a kinder perspective on base rate reasoning than the psychologists. My own perspective is that the interesting questions (both psychological (...) and normative/prescriptive) are best answered through empirical studies that use real-world performance standards. (shrink)

We have been oversold on the base rate fallacy in probabilistic judgment from an empirical, normative, and methodological standpoint. At the empirical level, a thorough examination of the base rate literature (including the famous lawyer–engineer problem) does not support the conventional wisdom that people routinely ignore base rates. Quite the contrary, the literature shows that base rates are almost always used and that their degree of use depends on task structure and representation. Specifically, base rates play a relatively larger role (...) in tasks where base rates are implicitly learned or can be represented in frequentist terms. Base rates are also used more when they are reliable and relatively more diagnostic than available individuating information. At the normative level, the base rate fallacy should be rejected because few tasks map unambiguously into the narrow framework that is held up as the standard of good decision making. Mechanical applications of Bayes's theorem to identify performance errors are inappropriate when (1) key assumptions of the model are either unchecked or grossly violated, and (2) no attempt is made to identify the decision maker's goals, values, and task assumptions. Methodologically, the current approach is criticized for its failure to consider how the ambiguous, unreliable, and unstable base rates of the real world are and should be used. Where decision makers' assumptions and goals vary, and where performance criteria are complex, the traditional Bayesian standard is insufficient. Even where predictive accuracy is the goal in commonly defined problems, there may be situations (e.g., informationally redundant environments) in which base rates can be ignored with impunity. A more ecologically valid research program is called for. This program should emphasize the development of prescriptive theory in rich, realistic decision environments. (shrink)

How can anyone be rational in a world where knowledge is limited, time is pressing, and deep thought is often an unattainable luxury? Traditional models of unbounded rationality and optimization in cognitive science, economics, and animal behavior have tended to view decision-makers as possessing supernatural powers of reason, limitless knowledge, and endless time. But understanding decisions in the real world requires a more psychologically plausible notion of bounded rationality. In Simple heuristics that make us smart (Gigerenzer et al. 1999), we (...) explore fast and frugal heuristics – simple rules in the mind's adaptive toolbox for making decisions with realistic mental resources. These heuristics can enable both living organisms and artificial systems to make smart choices quickly and with a minimum of information by exploiting the way that information is structured in particular environments. In this précis, we show how simple building blocks that control information search, stop search, and make decisions can be put together to form classes of heuristics, including: ignorance-based and one-reason decision making for choice, elimination models for categorization, and satisficing heuristics for sequential search. These simple heuristics perform comparably to more complex algorithms, particularly when generalizing to new data – that is, simplicity leads to robustness. We present evidence regarding when people use simple heuristics and describe the challenges to be addressed by this research program. Key Words: adaptive toolbox; bounded rationality; decision making; elimination models; environment structure; heuristics; ignorance-based reasoning; limited information search; robustness; satisficing; simplicity. (shrink)

Many kinds of creativity result from combination of mental representations. This paper provides a computational account of how creative thinking can arise from combining neural patterns into ones that are potentially novel and useful. We defend the hypothesis that such combinations arise from mechanisms that bind together neural activity by a process of convolution, a mathematical operation that interweaves structures. We describe computer simulations that show the feasibility of using convolution to produce emergent patterns of neural activity that can support (...) cognitive and emotional processes underlying human creativity. (shrink)

This article discusses the philosophical relevance of recent computational work on inductive inference being conducted in the rapidly growing branch of artificial intelligence called machine learning.

states are to be understood in terms of their functional relationships to other mental states, not in terms of their material instantiation in any particular kind of hardware. But the argument that material instantiation is irrelevant to functional..

Explanations of the growth of scientific knowledge can be characterized in terms of logical, cognitive, and social schemas. But cognitive and social schemas are complementary rather than competitive, and purely social explanations of scientific change are as inadequate as purely cognitive explanations. For example, cognitive explanations of the chemical revolution must be supplemented by and combined with social explanations, and social explanations of the rise of the mechanical world view must be supplemented by and combined with cognitive explanations. Rational appraisal (...) of cognitive and social strategies for improving knowledge should appreciate the interdependence of mind and society. (shrink)

A philosopher once asked me: “Paul, how do you collaborate?” He was puzzled about how I came to have more than two dozen co-authors over the past 20 years. His puzzlement was natural for a philosopher, because co-authored articles and books are still rare in philosophy and the humanities, in contrast to science where most current research is collaborative. Unlike most philosophers, scientists know how to collaborate; this paper is about the nature of such procedural knowledge. I begin by discussing (...) three related distinctions found in philosophy and cognitive science: knowledge how vs. knowledge that, procedural vs. declarative knowledge, and explicit vs. implicit knowledge. I then document the prevalence of collaboration in the sciences and its scarcity in philosophy. In order to characterize the sorts of procedural knowledge that make collaborative research possible and fruitful, I discuss how scientists collaborate, how they learn to collaborate, and why they collaborate. Contrary to some recent suggestions by philosophers, I will argue that knowledge how often does not always reduce to knowledge that, and that collaboration has many purposes besides the pursuit of power and resources. The relative scarcity of philosophical collaborations might be explained by the nature of philosophy, if the field is viewed as inherently personal or a priori. But I argue against this view in favor of a more naturalistic one, December 2, 2005 with the implication that the main reason why philosophers do not collaborate more is that they do not know how. My account of collaboration is based on my own experience, published advice by practicing scientists, and interviews with a group of highly successful scientific collaborators who are members of the Social Psychology area of the University of Waterloo Psychology Department. For the past two decades, Waterloo’s social psychology program has flourished, both in collaborative publication and in graduate training: their former Ph.D.. (shrink)

Substrate independence and mind-body functionalism claim that thinking does not depend on any particular kind of physical implementation. But real-world information processing depends on energy, and energy depends on material substrates. Biological evidence for these claims comes from ecology and neuroscience, while computational evidence comes from neuromorphic computing and deep learning. Attention to energy requirements undermines the use of substrate independence to support claims about the feasibility of artificial intelligence, the moral standing of robots, the possibility that we may be (...) living in a computer simulation, the plausibility of transferring minds into computers, and the autonomy of psychology from neuroscience. (shrink)

This target article presents a new computational theory of explanatory coherence that applies to the acceptance and rejection of scientific hypotheses as well as to reasoning in everyday life, The theory consists of seven principles that establish relations of local coherence between a hypothesis and other propositions. A hypothesis coheres with propositions that it explains, or that explain it, or that participate with it in explaining other propositions, or that offer analogous explanations. Propositions are incoherent with each other if they (...) are contradictory, Propositions that describe the results of observation have a degree of acceptability on their own. An explanatory hypothesis is acccpted if it coheres better overall than its competitors. The power of the seven principles is shown by their implementation in a connectionist program called ECHO, which treats hypothesis evaluation as a constraint satisfaction problem. Inputs about the explanatory relations are used to create a network of units representing propositions, while coherende and incoherence relations are encoded by excitatory and inbihitory links. ECHO provides an algorithm for smoothly integrating theory evaluation based on considerations of explanatory breadth, simplicity, and analogy. It has been applied to such important scientific cases as Lovoisier's argument for oxygen against the phlogiston theory and Darwin's argument for evolution against creationism, and also to cases of legal reasoning. The theory of explanatory coherence has implications for artificial intelligence, psychology, and philosophy. (shrink)

In adversarial problem solving (APS), one must anticipate, understand and counteract the actions of an opponent. Military strategy, business, and game playing all require an agent to construct a model of an opponent that includes the opponent's model of the agent. The cognitive mechanisms required for such modeling include deduction, analogy, inductive generalization, and the formation and evaluation of explanatory hypotheses. Explanatory coherence theory captures part of what is involved in APS, particularly in cases involving deception.

Purely parallel neural networks can model object recognition in brief displays – the same conditions under which illusory conjunctions have been demonstrated empirically. Correcting errors of illusory conjunction is the “tag-assignment” problem for a purely parallel processor: the problem of assigning a spatial tag to nonspatial features, feature combinations, and objects. This problem must be solved to model human object recognition over a longer time scale. Our model simulates both the parallel processes that may underlie illusory conjunctions and the serial (...) processes that may solve the tag-assignment problem in normal perception. One component of the model extracts pooled features and another provides attentional tags that correct illusory conjunctions. Our approach addresses two questions: How can objects be identified from simultaneously attended features in a parallel, distributed representation? How can the spatial selectional requirements of such an attentional process be met by a separation of pathways for spatial and nonspatial processing? Our analysis of these questions yields a neurally plausible simulation of tag assignment based on synchronizing feature processing activity in a spatial focus of attention. (shrink)

A number of theoretical positions in psychology—including variants of case‐based reasoning, instance‐based analogy, and connectionist models—maintain that abstract rules are not involved in human reasoning, or at best play a minor role. Other views hold that the use of abstract rules is a core aspect of human reasoning. We propose eight criteria for determining whether or not people use abstract rules in reasoning, and examine evidence relevant to each criterion for several rule systems. We argue that there is substantial evidence (...) that several different inferential rules, including modus ponens, contractual rules, causal rules, and the law of large numbers, are used in solving everyday problems. We discuss the implications for various theoretical positions and consider hybrid mechanisms that combine aspects of instance and rule models. (shrink)