A message from psychologists to economists: mere predictability doesn’t matter like it should (without a good story appended to it)

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Stephen J. Gould (Pittsburgh, 3/3/97) recently defined humans as ‘the primates who tell stories.’ This paper reviews evidence for a more radical definition as ‘the primates whose cognitive capacity shuts down in the absence of a story’ when attempting to incorporate probabilistic information to make a coherent probabilistic inference. Thus, people cannot conform (‘descriptively’) to the standard expected utility (EU) model of economic decision making, given that probabilities often cannot be combined either implicitly or explicitly in the absence of a good, clearly relevant story justifying the combination. Moreover, that inability severely limits the standard EU model for use in prescriptive decision making.