I Think—Therefore, I Am

Abstract

Abstract Humans display bounded rationality, bounded willpower, and bounded self-interest. Since all human actions and behaviour are influenced by the process of thinking, it is important to model this process based on the reality of boundedness. Psychologists have long recognized that human thinking is a function of two simultaneous processes: one, automatic and fast; and the other reflective but slow. The automatic system intuitively draws on an evolutionary pool of data hardwired into our minds and using default options and mental shortcuts produces adequately well-adapted decisions with minimal efforts. The reflective system, on the other hand, is more deliberative: weighs the nuances of various options consciously before deciding on one. Evidence shows that people under cognitive strain often find it difficult to think reflectively, this leading them to make less-than-optimal life choices and decisions. Under such stress, people frame their choices too narrowly, not consciously considering other, better options. Humans often act irrationally. Incorporating this reality in public policy decisions, some seemingly minor and low-cost policy changes can have large impacts on achieving better development outcomes. Most humans find the realities of their thinking and subsequent actions (or the lack of it) as fairly serious impediments in making the right choices. While the automatic system serves humans well, they could also veer towards less-than-optimal choices. In such situations, a nudge may help. Simple but suitable public policy and institutional changes, many of which can be seemingly minor and low-cost, can help a society do better.

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