School of Economics University of East Anglia Norwich NR4 7TJ, United Kingdom

1. School of Economics University of East Anglia Norwich NR4 7TJ, United Kingdom On Eyal Winter’s Feeling Smart: Why Our Emotions Are More Rational Than We Think Robert Sugden Contribution to symposium at Economic Science Association International Meeting, 8–11 July 2016, Jerusalem

2. What is Feeling Smart about? Eyal [or his publisher] says: Subtitle: Why our emotions are more rational than we think. Cover: Why do we have emotions? If they lead to such bad decisions, why hasn’t evolution long since made emotions irrelevant? Preface: Research in behavioral economics, and the popular literature that is has spawned … tends to concentrate on mental deviations that lead us away from rational decision making, and in some cases can harm us. … I will try to point out how emotions serve us and further our interests. (p. xi) Book has praise from 10 very distinguished readers. Most of them give the same summary… 2

3. [As this book demonstrates] emotional sensibility makes an important contribution to rational decision making. – Lawrence Summers Winter shows how expressing and understanding your feelings (and those around you) will help you become a far better strategist. – Barry Nalebuff We are used to thinking that emotions such as anger, love, insult, and so forth are irrational … Winter explains why these emotions are actually very rational, fulfilling important functions that usually advance the most vital interests of all of us. – Robert Aumann Eyal Winter has written engagingly … on why and how feelings make us smarter.– Vernon Smith Emotions and rationality are often thought of as polar opposites. But Eyal Winter .. shows compellingly that emotions can actually promote rational behavior.– Eric Maskin 3

4. Eyal Winter shows us how the emotions that we sometimes wish we didn’t have, such as anger and envy, can be surprisingly useful.– Dan Ariely It is a pleasure to follow Eyal Winter as he explores the deep logic of irrational emotions and helps us to see the rationality of irrational behavior.– Roger Myerson I.e. Eyal’s big idea is that emotions are rational; they make us smarter; they serve our interests. In fact, the book is only partly about this. It is certainly about the role of emotions in human decisions. But much of the book is about the evolutionary origins of emotions (i.e. theorising about how emotions promoted human survival and reproduction in prehistory). There is also quite a lot about ‘irrational emotions’ (title of Chapter 22) … 4

5. We are often limited in our ability to control our anger in situations in which it does not serve us or even harms us. (p. 219) Regret … is also an emotion that can have negative effects, sometimes leading us to make suboptimal decisions. … Fear of feeling regret … leads many to hold losing assets long after it has become unreasonable to expect that their worth will ever return to what is was when they bought them. (pp. 221–222) There is also an emotional curse to the winner’s curse. Participants in auctions often find themselves driven to submit high bids by ‘auction fever’ (p. 225). Displays of willingness to take risks in the presence of one or more other makers are intended to intimidate potential rivals for mates. In the nineteenth century this trait became so pronounced that many young men lost their lives in armed duels fought over petty insults (pp. 136–137) 5

6. Eyal’s argument is that we (i.e. our ‘cognitive systems’) can make rational use of our emotions. There is no method for completely eliminating irrational emotions, but they can be dulled, and their negative effects can be reduced by conscious awareness of their existence and effects. … Just as our cognitive system can enhance emotions that are helpful to us, it can rein in those emotions that are inimical to our best interests. (p. 227) Notice that the idea of ‘irrational emotion’ implies that ‘rational emotion’ does not mean ‘promoting survival and reproduction in prehistory’ (all genetlcally pre-programmed emotions are rational in this sense). It must mean: serving our actual interests, as they are now. 6

7. Eyal (following Robert Frank, Passions within Reason) claims that the primary role of emotions is as commitment devices: This brings us to the most important element in the framework of emotions: their ability to create commitments, in ourselves and others. (p. 5) Leading example: anger as a ‘rational emotion’. Being angry commits you to aggression, take revenge for insults, etc. In some situations, commitment to revenge has strategic value. When commitment has strategic value, anger is a rational emotion. As rational agents, we can self-stimulate rational anger: The conscious or subconscious awareness that anger would be useful for attaining your goal would create anger within you. (pp. 6–7) 7

8. Now my take on the argument… I agree with most of what Eyal says in the book. But for this symposium, it’s more productive to focus on a fundamental issue on which I think we don’t agree. This connects with the argument I presented in my plenary talk… 8

9. In my plenary talk, I argued that behavioural welfare economists use an implicit model of an inner rational agent. (The War of the Worlds model...) Human decision-making is modelled as if induced by a neoclassically rational inner agent which interacts with the world through a psychological shell. Deviations from neoclassical rationality are interpreted as errors induced by limitations of the psychological machinery. (The Faulty Econ.) But the rationality itself is not explained. How does this relate to Eyal’s argument? 9

10. Eyal doesn’t share the view that psychological machinery is generally a source of error. Remember the Preface: Research in behavioral economics… tends to concentrate on mental deviations that lead us away from rational decision making, and in some cases can harm us. … I will try to point out how emotions serve us and further our interests. (p. xi). But who is the ‘us’ with ‘interests’ that emotions can serve? I think Eyal is using a variant of the inner rational agent model. He is assuming an emotion-free inner agent with ‘interests’ that it seeks to promote. ‘Rationality’ is assessed in terms of this agent’s interests. Two differences from behavioural welfare economics: – When the psychological shell intervenes in the inner agent’s reasoning, this does not necessarily induce error. – The inner agent has some control over the psychological shell (e.g. ability to self-stimulate anger). 10

11. But Eyal’s use of the inner rational agent model is still problematic: 1. By treating emotions as external to the rational agent, it neglects the fundamental role of emotions in determining what we (real human beings) want. 2. Because emotions determine what we want, it’s not meaningful to talk about a person’s ‘interests’ independently of his emotions. So the concept of ‘rational emotion’ is ill-defined. 11

12. What is the fundamental role of emotions? Remember Eyal’s claim: This brings us to the most important element in the framework of emotions: their ability to create commitments. Can commitment really be the most important role of emotions? I think Eyal’s account misses out the most fundamental role of emotions in decision-making: ouremotions provide our sense of what we want to do. (Not: they provide our inner agents with information about what we want. They are what wanting is.) I think David Hume got it right in 1740: reason is the slave of the passions (i.e. emotions)… 12

13. Hume (Treatise of Human Nature, 1739-40): Reason is the discovery of truth or falsehood. Truth or falsehood consists in an agreement or disagreement either to the real relations of ideas, or to real existence and matter of fact. Whatever, therefore, is not susceptible of this agreement or disagreement, is incapable of being true or false, and can never be an object of our reason. Now ‘tis evident our passions, volitions, and actions, are not susceptible of any such agreement or disagreement; being original facts and realities, complete in themselves, and implying no reference to other passions, volitions, and actions. ‘Tis impossible, therefore, they can be pronounced either true or false, and be either contrary or conformable to reason. I.e. volition and action are not matters of rationality. They are psychological phenomena. ‘What I want’ is not a construction made by me as a disembodied rational agent. It is an emotion. Implication: We can’t stand outside our emotions and ask which emotions would be most useful in helping us to get what we want. 13

14. Take the case of anger. What is the psychological function of anger? First-order function: It is a prompt for aggression against some other person(s). It is wanting to attack. Or: when you do attack, it is the inner sense of volition. For this first-order function, the concept of commitment is redundant. You want to attack; you have the sense of not being able to do anything but attack; you attack. Compare nausea: the inner sense of wanting to vomit. Nausea commits you to vomiting, but the commitment doesn’t explain anything. I suggest: the fundamental evolutionary explanation of anger is that (in the prehistoric environment to which we are adapted) there are some situations in which aggression against particular others promotes fitness. We are pre-programmed to feel anger in those situations. 14

15. If an emotion has a first-order function, it can become a trigger for other people’s second-order emotions. E.g. in a situation in which we face a common risk from a predator, your sight of the predator induces fear in you (wanting to hide or escape). My recognition of your fear induces fear in me. This may be the origin of empathy (perception–action theory: Preston and de Waal). Or: in a situation of conflict: my recognition of your anger against me (wanting to attack me) induces fear in me (wanting to back down). Or: being in a situation in which people like you tend to show anger to me induces fear in me. 15

16. And then second-order emotions can induce third-order emotions. Being in a situation of conflict in which <my being angry tends to induce fear in you> induces anger in me. This is Eyal’s mechanism. I agree that it can exist. But I’m not persuaded that it is the primary role of anger. It’s just a role that happens to be particularly interesting to game theorists. 16

17. Is the concept of ‘rational emotions’ meaningful? In Eyal’s account, an emotion is rational for me if it furthers my ‘interests’. The implicit model is of an emotion-free inner rational agent which knows its interests and then evaluates its emotional machinery relative to those interests. But: there is no psychological explanation of the inner agent’s reasoning. Where do its interests come from? Why do these interests have the structure of decision-theoretic rationality? What motivates the agent to act on those interests (e.g. in self-stimulating anger)? 17

18. An illustration of the problem (building on one of Eyal’s examples): Suppose I am a gentleman in early 19th century England. You (another gentleman) accuse me of cheating at cards. Thinking about the insult, I feel anger. I demand either an apology or ‘satisfaction’. You refuse to apologise. Our seconds arrange the details: pistols at dawn on Hampstead Heath. As dawn approaches: thinking about the possibility of being shot, I feel fear. But thinking about the consequences of not fighting, I anticipate shame. Are these emotions rational or irrational? I.e. do they serve my true interests? This is is not a sensible question to ask…. 18

19. If the question is what do I really want, we already know the answer. This comes from my emotions: I want revenge; I want to escape the possibility of being shot; I don’t want to be seen as having acted shamefully. These wants are mutually incompatible. If I had a neoclassical inner rational agent, it could perhaps integrate these wants into a single preference in some emotion-free way (but remember that neoclassical theory doesn’t explain how this is done!) Then, emotions would be ‘rational’ or ‘irrational’ according to whether they were aligned with that preference. But unless we can specify a mode of reasoning that can generate ‘true’ preferences, the concept of rationality is empty. 19

20. My conclusion: talking about ‘rational emotion’ makes sense only within an implausible and psychologically ungrounded model of agency. There is no emotion-free ‘me’ whose interests can provide the standard for assessing the rationality of my emotions. My emotions are me. 20

21. Thank you for listening. 21