The problem of bounded rationality

Actually, the market place, in aggregate, has a long a glorious history of celebrating really mediocre crap technology that is an unfortunate compromise between cheap and “good enough”. In short, encouraging and then trusting people to “spend their money on better things” is a sure fire recipe to be subjected to crappy technology.

[On the ubiquity of social networking in inappropriate places.]

Imagine you’re the chief of staff on the Infrastructural and Technological Development team in your post-apocalyptic group of refugee zombie-survivors. Before you can start building anything, there’s a few things you need to decide upon. Let’s say you’ve still got a reasonable tool to measure the different quantities of both the metric and imperial system of measurements. Also, you’ve retained massive libraries of knowledge, from the details of the RoHS directive, to alternative economic theory, to RFC specifications for everything from email to HTTP/1.1 headers and the definitions of key words. But none of that matters, because you’re in charge of the only known colony of human beings left on the planet, you can do whatever the hell you want.

Surely, we’ve all had our if-I-were-in-charge moments and brilliant ideas that could have worked, were we not already so comfortable with certain widespread crapnology in existence. In cases like these, it’s not hard to see why a democratic direct vote may not be appropriate. Call it socialist or totalitarian, but often times, people don’t do a good job choosing what’s best for them. Or rather, they lack the necessary information to make a truly optimal choice1. Unfortunately, our economic system does not recognize this. Products and services are successful when a number of people buy and use them. Effectively, consumers are free to vote democratically with their dollars. But when information is too costly or time-consuming to come by, people tend to choose the “good enough” option, taking things at face value and economizing on time instead of value. It’s simply inevitable that, without proper information, people regularly end up voting for the wrong things.

And what are we to do about it? Wait for the apocalypse?

You can see that this difficulty is particularly frustrating to those who live to change the world. The more I read about the alignment of corporate profit-incentives and consumer benefit in social networking theory2, the less I can blame Zuckerberg for the pool-pah3 he’s created. I suppose the problem is not Facebook anymore, or perhaps, it has never been Facebook. That online social networking would be a major target in political campaigns, corporate propaganda, and intimate social interaction could hardly have been predicted by the hacker-culture engineers, founders of Facebook. People simply need a bit more time to mature and adjust. But nonetheless, it’s unacceptable to wait for markets to sort themselves out. If this nonsensical phenomenon4 can be observed and predicted, it can be avoided as well.

  1. See the theory of Bounded Rationality: “decision making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions”. ↩︎
  2. See The Real Life Social Network by Paul Adams. ↩︎
  3. “Sometimes the pool-pah exceeds the power of humans to comment.” -- Kurt Vonnegut. ↩︎
  4. Source of quote. ↩︎

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Fri, 21 Jun 2024 16:57:18 GMT