Review of Behavioral Economics > Vol 5 > Issue 3-4

The Bias Bias in Behavioral Economics

Gerd Gigerenzer, Max Planck Institute for Human Development, Germany, gigerenzer@mpib-berlin.mpg.de
 
Suggested Citation
Gerd Gigerenzer (2018), "The Bias Bias in Behavioral Economics", Review of Behavioral Economics: Vol. 5: No. 3-4, pp 303-336. http://dx.doi.org/10.1561/105.00000092

Published: 31 Dec 2018
© 2018 G. Gigerenzer
 
Subjects
Behavioral Economics
 
Keywords
Behavioral economicsBiasesBounded RationalityImperfect information
 

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This is published under the terms of CC-BY.

In this article:
1. Part I: The Irrationality Argument
2. Part II: Case Studies in the Bias Bias
References

Abstract

Behavioral economics began with the intention of eliminating the psychological blind spot in rational choice theory and ended up portraying psychology as the study of irrationality. In its portrayal, people have systematic cognitive biases that are not only as persistent as visual illusions but also costly in real life—meaning that governmental paternalism is called upon to steer people with the help of “nudges.” These biases have since attained the status of truisms. In contrast, I show that such a view of human nature is tainted by a “bias bias,” the tendency to spot biases even when there are none. This may occur by failing to notice when small sample statistics differ from large sample statistics, mistaking people’s random error for systematic error, or confusing intelligent inferences with logical errors. Unknown to most economists, much of psychological research reveals a different portrayal, where people appear to have largely fine-tuned intuitions about chance, frequency, and framing. A systematic review of the literature shows little evidence that the alleged biases are potentially costly in terms of less health, wealth, or happiness. Getting rid of the bias bias is a precondition for psychology to play a positive role in economics.

DOI:10.1561/105.00000092

Companion

Review of Behavioral Economics, Volume 5, Issue 3-4 Special issue Paternalism: Articles Overiew
See the other articles that are part of this special issue.