Abstract
It is time to transcend the arid debate between rationality and ir-, a-, or non-rationality as our basic assumption about human agency.1 There are powerful arguments and extensive evidence both for and against the rationality assumption, with heavily defended entrenchments on both sides. Managers and management scholars continually make at least tacit assumptions about how they expect others to behave. If only we could have in both theory and practice the coherence and precision of rational models as well as the descriptive richness of ‘behavioural’ approaches. The message of this paper is that perhaps we can. The advent of consciousness studies and, more recently, neuroeconomics would seem to indicate the way forward to transcend the opposition in some kind of synthesis.
This paper investigates rationality in the light of Daniel Dennett’s thesis that it is at the core of all intentionality that is the defining characteristic of mental phenomena. Neuroeconomics seeks to enhance understanding of agency by investigating new insights on the materialist basis of mental phenomenology in the neurophysiology of the brain and nervous system. Experimental evidence mapping intentional states onto neurophysiological states is emerging, some researchers even claiming to have found a ‘neurophysiological utility function’. Dennett closes the circuit by locating the existence of brain-hardware supporting satisficing intentional choice and action as the output of evolutionary ‘design’. The dichotomy is transcended: satisficing models (of which normative optimising rational choice models are a reasonable abstraction) are a good basis both for statistical prediction of the behaviour of large numbers, and as the first base on which to construct and refine a model of expectation-formation about particular types of agent and then of individual agents. Using both the old (‘external’) and the new (sub-individual) behaviourism as well as work on unpacking the abstract notion of rationality, we can concretise optimising rational choice both generally, for epistemic theory-building purposes, and specifically for understanding and deploying models of managerial agency. Such models will need to incorporate emotion with cognition in an integrated approach.
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References
For an introduction to the issues illustrated by a case see my. ‘Is Managerial Intuition Rational? The case of Long Term Capital Management’. Philosophy of Management (formerly Reason in Practice) 6 (1) 2007.
Some years ago I was addressing the Telecom Users of New Zealand Conference about the up-coming privatisation of New Zealand Telecom. Being a well-trained economist I introduced a model that I was to use for presenting some regulatory issues by pointing out that such models invariably assumed that all players were ‘rational’. The cacophony of mobile phone rings that was a ubiquitous feature of conferences then was drowned out by the gale of laughter that followed my remark.
Dennett, D. C. (1987). The Intentional Stance, MIT Press
This paper is in some part an investigation of ‘intentionality’ as applied to managerial agency. My take on the concept is derived from: Dennett, D. C. (1978). Brainstorms: Philosophical Essays on Mind and Psychology. London, Penguin p 326. Technically, intentionality is chiefly a feature of linguistic entities that are ‘about something’. A proposition is intentional just so ‘substitution of co-designative terms does not preserve truth or if the ‘objects’ of the idiom are not capturable in the usual way by quantifiers.’ Oedipus intended to have sex with Jocasta, but not his mother — even though, extensionally, Jocasta and his mother were one and the same.
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Dennett (ibid: 271) argues, optimistically, that ‘we can fend off the absolutism that sees only two possibilities: either we are perfectly rational or we are not rational at all. We are actually wonderfully rational. We are rational enough, for instance, to be really good at designing ploys for playing mind games on each other, seeking out ever more subtle chinks in our rational defences, a game of hide-and-seek with no time out or time limit [as well as]... co-operators capable of solving commitment problems and establishing … reputation as moral agents get to enjoy the many benefits of being a trusted member of the community’.
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Dennett 1978, ibid: xviii, 5 8, 23. ‘We expect the tactic of adopting the intentional stance to pay off... whenever we have reason to suppose the assumption of optimal design is warranted, and doubt the practicality of prediction from design or physiological implementation.’ Dennett, 1978, ibid.
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Gallagher et al (2002, ibid) aimed to ‘identify the phenomenology associated with the experiment, in order to determine whether there was a general experience that could be correlated with neuronal activation’.
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Dennett 2003, ibid: 268)
Dennett 2003, ibid: 218
‘The ideal of free will in which we are Kantian rational agents, responsible for our own destiny’ Dennett 2003, ibid: 270
Dennett 2003, ibid: ‘The quest for ‘true’ selflessness is a mission that is guaranteed to fail. It must fail not because we’re no angels (we’re no angels, but that’s not the problem), but because the defining criteria of true selflessness are systematically elusive, as we shall see. It is better to think of the human capacity to rethink one’s summum bonum as the possibility of extending the domain of the self. I can still take my task to be looking out for number One while including under number One not just my own living body, but my family, the Chicago Bulls, Oxfam... you name it’.
Dennett 2003, ibid: 194
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Dennett 1978, ibid: 253; Dennett 2003: 284: ‘The genuinely autonomous agent is rational, self-controlled, and not wildly misinformed’
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The first workshop explicitly on neuroeconomics was hosted by Carnegie Mellon University in 1997.
Camerer, C. F., G. Loewenstein, et al., 2003, ibid. ‘Much neural evidence comes from studies of the brains of nonhuman animals (typically rats and primates). The ‘animal model’ is useful because the human brain is basically a mammalian brain covered by a folded cortex which is responsible for higher functions like language and long-term planning. Animal brains can also be deliberately damaged and stimulated, and their tissues studied.’
Glimcher, Dorris et al. 2003, ibid: 32, 61
Glimcher, Dorris et al. 2003, ibid: 9 ‘We began this neurobiological investigation, however, hoping to account for simple, crude, reflexive kinds of decision making. The kinds of processes that we might expect to occur when, as Vernon Smith put it, ‘the brain takes over’. Instead what we seem to have found is a system that can at least partially account for rational decision under a broad range of conditions. If that is so, then two critical questions remain. First, what brain areas are responsible for computing the physiological expected utilities that appear to be represented in area LIP? Second, what happens when subjects behave irrationally?’
Glimcher, Dorris et al. 2003, ibid: 1–2
Glimcher, Dorris et al. 2003, ibid
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In Expression of the Emotions in Man and Animals, Darwin (1872) lists six ‘universal emotions’: happiness, sadness, anger, fear, disgust and surprise. Stuart Walton (2005) in Humanity: an Emotional History Atlantic adds jealousy, contempt, shame and embarrassment
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Goldsmith, H. H. (1994). Parsing the emotional domain from a developmental perspective. The Nature of Emotion: Fundamental Questions P Ekman and R J Davidson. NY & Oxford, Oxford University Press: 67–73
Zizzo 2003, ibid: 9
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Davidson ibid ‘Insufficient introspection [between a state where the agent is angry and a state where she is not] may lead to inter-temporal inconsistency in the utility function.’ Because of ‘recent neurobiological work which suggests that brain systems associated with emotion have a relatively ancient evolutionary origin, these economists suggest that irrational behaviour is produced by these ancient emotional systems in the brain.’ 78 Goldsmith 1994, ibid
Zizzo 2003, ibid: 14ff; Cf LeDoux, J. (1998). The emotional brain. London, Weidenfeld and Nicolson.
Loewenstein, G. (1996). ‘Out of control: Visceral influences on behaviour.’ Organizational Behaviour and Human Decision Processes 65: 272–292.; Sanfey, A. G., J. K. Rilling, et al. (2003). ‘Probing the neural basis of economic decision making: An fMRI investigation of the ultimatum game.’ Science 300 (5626): 1755–58.
Kaufman, B. E. (1999). ‘Emotion arousal as a source of bounded rationality.’ Journal of Economic Behaviour and Organization 38: 135–144.; Solomon, R. C. (2000). The philosophy of emotions. Handbook of Emotions. M. Lewis and J. M. Haviland-Jones. New York and London, The Guilford Press: 3–15; Cf Zizzo 2003, ibid 7
Zizzo 2003, ibid.: ‘as a result of their neurobiological impairment to feel at least some emotions, agents appear more likely to be facing...‘Buridanic problems’: situations where an agent is required to take a choice but there is a perfect indifference among outcomes. This appears a natural implication of conceiving emotions as preferences, as a preference of any kind would avoid the indifference among outcomes that characterizes Buridanic problems. In itself, the potential role of emotions in reducing the likelihood of Buridanic problems is consistent with economic rationality as much as it is consistent with Hanoch, Y. (2002a). “Neither an angel nor an ant’: emotion as an aid to bounded rationality.’ Journal of Economic Psychology 23: 1–25.and Gigerenzer, G. and P. M. Todd (1999). Simple heuristics that make us smart. New York, Oxford University Press. view of bounded rationality as based on ‘fast and frugal heuristics’.’
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There is evidence, for example, that ‘Certain areas of the prefrontal cortex are likely to be more involved with anger processing than the amygdala, the sub-cortical ‘emotional computer’ of LeDoux 1998, ibid.’ Cf. Zizzo 2003, ibid: 3)
Camerer, Loewenstein et al. 2003, ibid; Glimcher, Dorris et al. 2003, ibid: 6; Loewenstein 1996, ibid
Glimcher, Dorris et al. 2003, ibid: 60
There is no evidence that some sort of primitive system exists which can wrest control of the motor system from a more recently evolved (or uniquely human) system. Zizzo 2003, ibid: 14
Zizzo 2003, ibid:7-8; pace Damasio 2000, ibid; Hanoch, Y. (2002a). “Neither an angel nor an ant’: emotion as an aid to bounded rationality.’ Journal of Economic Psychology 23: 1–25; Hanoch, Y. (2002b) ‘The effects of emotion on bounded rationality: a comment on Kaufman’ Journal of Economic Behaviour and Organization 49: 131–135.; Sanfey, Rilling et al. 2003, ibid
‘An increase in emotional intensity, such as a shift from depression toward anger or from boredom toward excitement, reduces or alleviates these barriers to optimal decision making, at least up to a point’ Kaufman 1999, ibid: 138; Cf. Zizzo 2003, ibid: 10: ‘it is not hard to believe that having some motivation, whether induced by anger or by some other emotion, may create the incentive for rational agents to put in more effort in a task. Nor is it hard to believe that being ‘too angry’ may hinder performance’
Kaufman loc cit 1999. Research by Gerald Clore and others ‘shows that emotional feelings provide compelling information about the value of outcomes, actions, and objects’ providing ‘a coherent basis for judgment and decision’ Clore, G. (2004). Rationality: The View from Emotion Theory. Must we choose between rationality and irrationality? Chicago-Kent College of Law.
Clore et al ibid
Glimcher, Dorris et al. 2003, ibid: 63
Frank 1988, ibid
Glimcher, Dorris et al. 2003, ibid: 55. For example, Glimcher, Dorris et al. 2003 ibid: 37) indicate (in the case of an Inspection Game with humans, monkeys and computers) the point of linkage between economics (GT) and neurobiology: ‘The Nash approach argues, essentially, that equilibrium occurs when the desirability of working and shirking are equal. Economists define those desirabilities as rational when they are well predicted by the expected utility of prescriptive theory. But rational or not, those desirabilities might well be represented at some point in the neural architecture.’ This kind of work opens up the possibility of unpacking the details of failed predictions at the intentional level in terms of sources [from the design or physical stance] of rationality/irrationality in the brain’s neural architecture.
Glimcher, Dorris et al. 2003, ibid: 40 offer evidence that ‘Map-like structures in the brain may encode, quantitatively, the relative desirabilities of all possible courses of action. They conclude from their experiments that: ‘The firing rates were indistinguishable, a finding consistent with the hypothesis that LIP [neurones in a particular brain location firing rates encode the [relative] physiological expected utility [a function of ‘desirability’] of choices’
Glimcher, Dorris et al. 2003, ibid. ‘The interaction between the utility representation in area LIP [brain] and the movement execution circuitry in the frontal eye fields and superior colliculus [the relevant parts of the body] thus forces a convergence to a single output, the single output associated with the highest expected utility.’
Further: Glimcher, Dorris et al. 2003, ibid.: 46 ‘there is growing evidence that the stochasticity of a neuronal population like LIP may be variable and may be set dynamically to maximize task performance (Barraclough et al., 2002, ibid).’ ‘With this knowledge in hand it seems that we really can begin to perform experiments that might yield mechanistic explanations of economic behaviour that tie classes of decisions to the underlying hardware.’ Glimcher, Dorris et al. 2003, ibid.: ‘What this [experiment with monkeys in which ‘the task of an efficient monkey is simply to learn when to move in order to maximize juice intake.’ (p 50)] suggested was that something very close to an economic choice variable was indeed being carried by the firing rates of these neurons.’ Glimcher, Dorris et al. 2003, ibid. report further: ‘results suggested an interesting possibility, that the topographic map [representation of changing visual stimuli] in area LIP [of the brain] encodes something like the relative expected value, or perhaps even the relative expected utility, of each possible eye movement under the conditions we had been studying.’
Glimcher, Dorris et al. 2003, ibid: 63)
For example, Kahneman, D. and A. Tversky (1990). Rational Choice and the Framing of Decisions. The Limits of Rationality. K. Cook and M. Levi. Chicago, University of Chicago Press: 60–89; Schultz, Montague, et al. (1997). ‘A Neural Substrate of Prediction and Reward.’ Science 275: 1593–1599: report: ‘Based on these observations Schultz argued that the dopamine neurons seemed to encode the difference between the reward that an animal expected to receive and the reward that an animal actually received ‘
Hanoch 2002b, ibid, van Winden 2001, ibid; Cf. Glimcher, Dorris et al. 2003, ibid: 60
Glimcher, Dorris et al. 2003, ibid: 64
Arthur 2000, ibid: 7
For just such an attempted use of an existing case study to investigate business agency that hopefully throws new light on a major recent business event, see my ‘Is Managerial Intuition Rational: the case of Long Term Capital Management.’ Philosophy of Management (formerly ‘Reason in Practice’) 6.1, 2007
Reverting to ‘scientific’ implications, note that pro-materialist evidence has been accumulating for some time that antecedent changes in neurophysiological brain states can be detected before the agent is consciously aware that they have, for example, made a decision to act. As I write, today’s Guardian (Ian Sample (2007) ‘The brain scan that can read people’s intentions’ The Guardian, 09.02.07: 1–2) leads with a story about how developments of software and fMRI scanning are enabling neuroscience to identify neurophysiological antecedents to intentions that have not yet emerged as conscious mental phenomena. It may well be some time before the captains of industry permit scanning of their brains during managerial decision making, but we can already scan the brains of participants in simulations of and experiments on such activities.
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Williams, M. Towards a Better Understanding of Managerial Agency: Intentionality, Rationality and Emotion. Philos. of Manag. 6, 9–26 (2007). https://doi.org/10.5840/pom20086231
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DOI: https://doi.org/10.5840/pom20086231