Choice Architecture, Bounded Rationality and Bounded Willpower in North Korea

By Alfio Cerami

Rev. 11/12/2017

Source photo: A photo taken released by North Korea’s official news agency shows the Hwasong-15 missile on Nov. 29. PHOTO: KCNA VIA KNS/AGENCE FRANCE-PRESSE/GETTY IMAGES Novermber 29, 2017

In Choice Architecture, 2017 Nobel Prize Winner Richard H. Thaler and his colleagues Cass R. Sunstein, John P. Balz (2014) define the NUDGES approach. It comprises of six main principles for making good policy choices: iNcentives, Understand mappings, Defaults, Give feedback, Expect error, and Structure complex choices.

iNcentives refers to prices and incentives. More specifically, it has to do with: who uses, who chooses, who pays, who profits of (and by) a determined policy choice.

Understand mappings concerns the right policy choices that lead to the welfare of society. This, for example, involves selecting which policies to choose among a wide variety of possible equally suitable alternatives.

Defaults means avoiding the least pathway of resistance when this default option (doing nothing or no change) leads to negative results (Thaler et al. 2014, p. 430).

In complex systems, Give feedback is a necessary endeavor to avoid mistakes. What rose the admiration of baseball fans and gives them joy is often the individual achievements of players. But the player there does not stand alone at the plate, because s/he is part of a team. Looks, throws, catches, hustles are all elements part of one big team. Giving feedback to players becomes, in this context, necessary to ensure the consistency of their game choices.

Expect error is a fifth important element in order to improve a policy-maker’s choice architecture. If a player goes out there for himself/herself without thinking about the team (or caring about the team), he or she gets nowhere. The team must fit, players must expect errors and learn how to deal with them.

Structure complex choices is hence the sixth and final element of the NUDGES approach. It involves the necessity of adopting different strategies for dealing with complex problems and choosing the best alternative with more trade-offs. Structure complex choices means, in brief, having in mind a structure of alternative suitable strategies.

In Behavioral EconomicsRichard H. Thaler, and Sendhil Mullainathan (2001) discuss two important concepts in sociology and behavioral economics, as elucidated by Herbert Simon (1955): Bounded rationality and bounded willpower.

Bounded rationality refers to the bounded rational cognitive processes that an individual faces in a determined institutional setting. This includes also the ways in which they deal with the Descartes’ Error (Damasio 1994) – that is to say – the tensions that exist between their emotions and ir/rational behaviors. In other words, their Feeling of What Happens (Damasio 2000).

Bounded willpower concerns, instead, the desires’ contraints that actors face in their everyday life, especially when socialized in determined institutions. As Thaler and Mullainathan (2001) have correctly emphasized, departures from pre-existing ir/rationalities are not rare (on path-departures, see also Cerami and Vanhuysse 2009; Cerami 2013). In this context, it is not rare to adopt “the rule of the thumb as a way to economize on cognitive faculties” (Thaler and Mullainathan 2001, p.3).

In the case of the US-North Korea war diatribe, the issue at stake is, to paraphrase Thaler and Mullainathan (2001, p.2 ), whether it makes sense to follow “dumb money”, as in the case of nuclear proliferation activities promoted by the industrial-military complex, versus following “smart money”, as in the case of ensuring peace, stability, human and socio-economic development.

Who uses? Who chooses? Who pays? Who profits? As argued in my previous blog post, the costs associated with nuclear proliferation and war escalation activities are enormous, as introduced by the buyngjing line of political economy, which, as said, couples policies aimed at nuclear development with socio-economic growth aspirations. These incalculable costs include social costs, political costs, economic costs and cultural costs.

As mentioned at the beginning of this blog post, the choice architecture, bounded rationalities and bounded willpowers are intertwined elements in making good policy choices. However, little has been said about bounded selfishness (Thaler and Mullainathan 2001). This refers to the bounded selfishness of egoistic actors who cannot see where war-related and nuclear escalation games end.

Engaging in war-related and nuclear proliferation political economies, it hurts the people. It gives joy only to selfish players.

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