Episode 13: Satisficing


I want to give credit to an old paper that was quite ahead of its time. In 1956 Herbert Simon in his paper “Rational choice and the structure of the environment” had some of the ideas of behavioral economics before the field had really developed.

His take on some of the interesting human behaviors was a word entitled “satisficing”. It’s a combination of sufficing (good enough), and satisfying. Behavioral scientists often will use different phrases today like cognitive biases and prospect utility, but you’ll still hear economists mention the phrase satisficing now and then.

Satisficing is the idea that when people make decisions, they don’t optimize for maximum enjoyment the way an economist would expect. Rather, as the Behavioral Economics Guide of 2016 summarized, people “choose options that meet their most basic decision criteria.”

For example, if you really want fancy Mexican food, and eating fancy Mexican food would give you the most happiness, and maximum utility, the traditional economist would predict that you get fancy Mexican food. But, of course, we don’t do that, we do what is satisfying, and sufficing; satisficing. So instead of getting fancy Mexican, you go to Chipotle and get a burrito. It’s enough.

Later Tversky and Kahneman would come along and invent prospect theory, and a much more solid behavioral economic model and base on which the modern version of behavioral science is founded. But Herbert Simon gets lots of credit for being really far ahead of his time and putting down a ton of ideas that influenced future thinkers.

 

Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological Review63(2), 129-138. doi:10.1037/h0042769

Episode 14: The Big Reason People Are Only Open To Their Own “Group-Think” Ideas: Self-Regulatory Fit and Persuasion
A Closer Look At Concession, or "The Foot In The Door" Technique

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