The Importance of Small Decisions

Reading Recommendation: The Importance of Small Decisions, MIT Press, 2019.

Summary:  

Economic models of choice once assumed that we make rational decisions. These concepts are now out of the window as we have developed alternative ideas around notions of consumer preferences. Economist now consider whether a consumer may choose a higher-priced item to determine if it will provide more satisfaction than they might experience if they bought a more familiar lower-priced item. Economist now consider the “fitness landscape” of the individual making a decision as well as the fitness of others in a group. “Group minds” such as committees and teams aim to reach collective decisions. The fitness of individual team members partially determines the fitness of the group as a whole. Four options determine people’s decisions: “intrinsic utility, social utility, transparency” and “opaqueness.” Decision making can shift across these options depending on context.

About the Authors

Michael J. O’Brien, PhD, is provost and professor of history at Texas A & M–San Antonio.

  1. Alexander Bentley, PhD, is chair of anthropology at the University of Tennessee.

William A. Brock, PhD, is professor emeritus of economics at the University of Wisconsin–Madison.

Take-Aways

  • Economic models of decision making have changed.
  • Individuals act within a “fitness landscape.”
  • Four options determine people’s decisions: “intrinsic utility, social utility, transparency” and “opaqueness.”