Dr. Gigerenzer explains to me how to make better decisions under uncertainty via use of heuristics, intuition, and narratives. Dr. Gerd Gigerenzer, PhD is Director of the Harding Center for Risk Literacy at the University of Potsdam, Faculty of Health Sciences Brandenburg and partner of Simply Rational - The Institute for Decisions. He is former Director of the Center for Adaptive Behavior and Cognition (ABC) at the Max Planck Institute for Human Development and at the Max Planck Institute for Psychological Research in Munich, Professor of Psychology at the University of Chicago and John M. Olin Distinguished Visiting Professor, School of Law at the University of Virginia. Awards for his work include the AAAS Prize for the best article in the behavioral sciences, the Association of American Publishers Prize for the best book in the social and behavioral sciences, the German Psychology Award, and the Communicator Award of the German Research Foundation. His award-winning popular books Calculated Risks, Gut Feelings: The Intelligence of the Unconscious, and Risk Savvy: How to Make Good Decisions have been translated into 21 languages. His academic books include Simple Heuristics That Make Us Smart, Rationality for Mortals, Simply Rational, and Bounded Rationality (with Reinhard Selten, a Nobel Laureate in economics). In Better Doctors, Better Patients, Better Decisions (with Sir Muir Gray) he shows how better informed doctors and patients can improve healthcare while reducing costs.
[00:00:00] Christine Ko: Welcome back to SEE HEAR FEEL. Today, I'm honored to be again with Dr. Gerd Gigerenzer. In case you haven't had a chance to listen to part one, I will give a little background. Gerd Gigerenzer, PhD, is Director of the Harding Center for Risk Literacy at the University of Potsdam, Faculty of Health Sciences, Brandenburg, and partner of Simply Rational, The Institute for Decisions. He is former director of the Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development. He has received numerous awards for his work, and he has many popular books in the lay press as well as numerous academic books.
[00:00:40] Welcome again to Gerd, and I will continue the conversation with him. Previously we spoke about optimizing judgments under uncertainty. You named using heuristics, intuition and trusting other people, and narratives. It sounds like if I make judgements, if I practice doing it, I become better when I analyze afterward. Did I use intuition, did I use analytical or both? And the outcome, and you do that over and over again and practice it. That's how you can get better at making judgements under uncertainty, or do we never really get better?
[00:01:18] Gerd Gigerenzer: No, you certainly get better. One way is to observe how good decision makers make the decisions, work out the heuristics that can be pictured in a fast and frugal tree, or in some other way.
[00:01:30] Christine Ko: Your term fast and frugal trees. It's like a fast and frugal decision tree. Basically like a very simple algorithm. Is this there? Yes or no? And if it's yes, you go one route or no, you go another and et cetera, and you can have more branches to the tree. For example, a dermatopathology fast and frugal tree, like, the very first branch, [Yeah.] And if it's a tumor, I go one way, and if it's not a tumor, I just go in a different way. And like for tumor, is it a blue tumor or not? It's a blue tumor, so for example, basal cell carcinoma, the most common skin cancer, that's often, the most available answer.
[00:02:05] Gerd Gigerenzer: A fast and frugal tree is frugal because you ask only one, two, or three questions. And it's also fast because it may be just the first one who decides it. It is highly efficient in situations under uncertainty where complex methods are often not better at all. And then we study in what situation is this a good idea? So no heuristic works everywhere. So that's the one big lesson under uncertainty. There is no hammer that works all the time. It's not like the fiction of expected utility theory. In the real world, you need a toolbox. The interesting thing about heuristics is, and uncertainty, that it's often the case, when you make a decision faster, it actually is better than thinking more. We've shown this in sports. For instance, in one experiment that my postdocs did, they had experienced handball players, so they put them in uniform. In the lab, there's a ball in the hand in front of a video where a top game was running and the instruction was, this will run for 10 seconds and then it stops.
[00:03:19] And then please tell me immediately what the player with the ball should do. So they watch that stops, it freezes, and they might say, oh, pass to the right, yeah, or, loop or, shoot at the goal. And that's the first intuitive response they have. Then the experiment continues. They have another 45 seconds time to generate more options. So in one case, the player said, oh, I hadn't seen the guy on the left side. That would be also a great option. And then you can analyze if you have all the options that were generated, how good they are. And the study showed, similar to many other studies, the first option that comes to mind is, on average, the best.
[00:04:06] And now you can understand that giving more time to an experienced player is a bad idea. So just having little time and acting fast is the best option because the lesser options don't even come into mind. And this is very different from the usual idea. It's called an accuracy speed tradeoff, that if you make something quickly, then you lose on accuracy. Here it's the opposite. And the reason is because we have to do with uncertainty and with experienced players. In most psychology experiments, no experience. People are studied, but undergraduates or Amazon truck workers, we have basically no idea of what they're supposed to do. And then you find the trade off between accuracy and speed, but under uncertainty, with trained people, it's the opposite.
[00:05:02] So in general, if you as a doctor have an intuition about something, you can be fairly certain, that's probably right.
[00:05:10] Christine Ko: If you show two or more experts, this is in the literature all over in pathology and dermatology, that experts will disagree actually on whether something is a cancer or not. And even the same expert will disagree with themselves sometimes on whether it's a cancer or not when you do the studies. I think that's part of my struggle with these judgements under uncertainty.
[00:05:36] Gerd Gigerenzer: But here's is good example here. So you realize that there is always a level of uncertainty. Even if you're an expert. You're not alone. The same holds for in the law, in the courtroom, for churches. There's always an uncertainty.
[00:05:53] Christine Ko: Yeah. I think the intuition thing, even with years of experience, also relates to judgment under uncertainty because you need to know who has good intuition.
[00:06:07] Gerd Gigerenzer: If you basically deal with calculation problems that are in the world of risk, you don't need heuristics, and heuristics lead you astray. They are something stupid to do. Yes, no question. But in other situations, intuition, divide equally, or a fast and frugal tree is the best thing you can do. So that's what I call ecological rationality. You may always ask, so is that rule that you follow, is that the right thing in the situation? You ask, is this the right situation to use that heuristic?
[00:06:43] In the real world, particularly when it's about innovation, intuition is the major force. In a study that interviewed 17 Nobel Laureates, almost all of them explained their breakthrough, their big leap, as an interplay that is going back and forth from analysis to intuition, to analysis to intuition. These are not opposites. You need both of them. Yeah. Intuition has been looked down for centuries. It's associated with esoterics, or God's voice, or a sixth sense, or with female intuition. While we men, we are rational in this view. So it has been downgraded, and it's absolutely wrong. For instance, when I work with large companies, and I ask the decision makers, the executives, how often is an important decision, a professional decision that you make or you participate, at the end, an intuitive decision? And the emphasis is on the end because of course they're looking into data, but often the data doesn't give you a clear answer. So what would you think? How often is that decision at end, an intuitive one? According to their own reports, it's about 50% of all important decision is intuitive. That means they cannot explain it. Overconfidence is often called bias, but we would've never discovered the New World if there wouldn't be a few guys overconfident.
[00:08:27] Christine Ko: Some people have better intuition than others.
[00:08:30] Gerd Gigerenzer: Yeah. That's true. And the interesting thing is that often the answer after a year is different from the answer after five years. And that's also in personal relationship. So you marry the man of your dreams. Yeah. And in the year it may look different.
[00:08:50] Christine Ko: Yeah. So what do you do about that?
[00:08:52] Gerd Gigerenzer: Oh, I have a positive attitude towards uncertainty. So imagine the world would be totally predictable. Certain we would know everything that happens in the future. We would know when we die. We would know on what we die. We would know everything. And how boring would that be? It's like reading the newspaper of last year. Without uncertainty, there would be no fun, huh? There would be no disappointment, no hope, and no reason to have any emotions. You don't even have to trust someone because you know already. Without uncertainty, we wouldn't need emotions. We also would need no intelligence besides maybe calculation. And, nothing would ever be new. No innovation.
[00:09:41] Christine Ko: So do you think emotions are there because of uncertainty?
[00:09:45] Gerd Gigerenzer: Yes. Humans evolved to deal with uncertainty, not with a world that is stable and where we know everything that could happen. Think about getting into a relationship or love. Emotion in this case helps to cement at least for some years against always going after the next one that comes around. And these emotions, like parental love, play an important role in order to provide a kinda heuristic scheme, you automatically, without thinking, you take care of your kids. And this is why we have emotions, and that's why we have the social life. Cause we need the others to reduce the uncertainty to deal with it.
[00:10:31] Christine Ko: Yeah. Emotions and like bodily reactions, kind of, embodiment, which is like a gut feeling, I guess, when people are like, oh, it just doesn't feel right.
[00:10:40] Gerd Gigerenzer: That's correct. The intuitions express themselves as a feeling. Yeah. You shouldn't do that. Something is wrong here in this situation. And we attribute that in the English language to guts, in the German language to the stomach, in France to the heart; where they locate this type of feeling. What we know from the research is if an experienced person, so a person who has experience in the topic in question, has a negative gut feeling, that's even more reliable than a positive one. It's a kinda warning signal, huh? Keep your fingers away from this person. These things have been studied in quite a number of situations. Particularly, for instance, take hiring. You hire a colleague, and the colleague looks excellent on paper, in the CV, but while you interview that person, you feel something is wrong. And then you have to make a decision. Go with your gut feeling or with what you find on the paper. And most people who decided in this situation for going with the CV regretted it later. They were not listening to the negative gut feeling. And again, if you are a novice, if you've never done an interview, even no experience with other people, or as a doctor, you're totally new, then you shouldn't trust your gut feeling. And then you might use social heuristics, ask for advice. Narratives and stories are also looked down by much of the social sciences, but in fact, they are very useful tools. There are different kind of narratives. The simplest one would be, in case of medicine, another patient. You have a story about this patient. It's usually a causal story. These narratives are also different from machine learning techniques and other things which are correlational. Or it could be bigger narratives. Some of the biggest narratives give you a sense of why you live and what you live for. And these are often religions. And for instance, Max Weber, the sociologist, has written a beautiful work on the Protestant work ethics, as opposed to Catholics, for instance. And that is a narrative. And there's always in this stories, always uncertainty. You'll never be sure, but you can watch yourself: if you work hard, if you follow the rules, you may end up on the right side. So this is a big narrative that determines then the behavior of people. Many of my friends, particular friends in the US, they don't even stop working for lunch. They eat while working. My Italian friends wouldn't do that. They take an hour off and enjoy food. So these are an example of the big narratives that basically guide your lives, your values, and also what do you think is moral. It's unconscious, and it determines the way you live.
[00:13:48] Christine Ko: Yes. Do you have any final thoughts?
[00:13:51] Gerd Gigerenzer: I believe that the systematic study of heuristics and these tools to deal with uncertainty helps people to make better decisions.
[00:14:00] Christine Ko: Thank you so much for doing this with me.
[00:14:02] Gerd Gigerenzer: Yeah, it was a pleasure, Christine.