Chapter 112 - Models of My Life
Today’s Chapter is based on the book “Models of My Life”, an autobiography by Herbert A. Simon.
Herbert A. Simon was a renowned American polymath whose work significantly impacted fields such as economics, cognitive psychology, and computer science. He is best known for his theory of bounded rationality, which challenges traditional notions of perfect rationality in decision-making by acknowledging cognitive and informational limitations. Simon received the Nobel Prize in Economics in 1978 and the Turing Award in 1975 for his contributions to artificial intelligence and problem-solving.
Here’s what I learned:
Self-Learning
"If you read a page a minute, then set aside an hour a day, it's very easy to read a book a week. This habit contributed more to my knowledge base than my three university degrees."
— Seymour Schulich
One of the most important thing we can learn from Herbert A. Simon is his unwavering commitment to self-education. From his early years as a curious boy in Wisconsin to his later achievements as a polymath, Simon repeatedly demonstrates the value of taking charge of one’s own learning. His childhood fascination with books and ideas set the foundation for his lifelong intellectual journey.
Herbert recounts how as a boy, he “kept his education entirely in his own hands, seldom asking for advice. The encyclopedia had an index, and the public library, a card catalog. In books left by his uncle or his brother, he studied economics, psychology, ancient history, some analytic geometry and calculus, and physics.”
This independent pursuit of knowledge extended into adulthood. As a matter of fact, while he was studying at the University of Chicago, Simon was dissatisfied with the structure of his formal education. As such, he decided to stop going to class and to learn by himself, which ended up being a great decision.
“Early in my second year, I terminated my formal education in mathematics when a calculus professor insisted that I attend class. From then on, almost all my knowledge of mathematics was self-taught, some of it while I was at the university, but continuing fairly intensively until the early 1950s, carrying through most of the subjects in a doctoral curriculum of that time (lots of higher algebra, analysis, and function theory; little topology). Self-instruction gave me the courage and skill to master new areas of mathematics whenever I needed them for my research. It also left me with mathematical skills that are more rough-and-ready than polished.“
— Herbert A. Simon
Similarly, Simon enrolled in a French class in his first year at the University of Chicago but almost never attended the lessons. Rather than going to classes, Simon learned French by reading advanced books in political science from Rousseau and Montesquieu on his own. As he explains, “One can learn to read a language fluently only by spending many hours reading.” Simon believes that it is through reading that he could read professional books and papers in more than twenty languages.
Simon’s criticism of formal education definitely impacted his vision on teaching. In fact, once Simon became a teacher, he did not believe in having a fixed curriculum for his students. As he explained, “Coverage of subject matter is a snare and a delusion. You begin where the students are prepared to begin; and you carry them as far as you can without losing them. Whether that takes you to the end of the specified curriculum, half as far, or twice as far, is irrelevant.”
This reminds me of what we have learned from Henry Ford who believed that one’s knowledge should not be judged by their formal education. As he once said, “An educated man is not one whose memory is trained to carry a few dates in history—he is one who can accomplish things. A man who cannot think is not an educated man however many college degrees he may have acquired.”
“But the best that education can do for a man is to put him in possession of his powers, give him control of the tools with which destiny has endowed him, and teach him how to think.”
— Henry Ford
Furthermore, he believes that one’s education starts after graduation, as the main goal of education “is to teach him how to use his mind in thinking.” As such, when Henry Ford was running the Ford Motor Company, Ford never hired any experts or men with past experiences. His reasoning was that “A man who knows a job sees so much more to be done than he has done, that he is always pressing forward and never gives up an instant of thought to how good and how efficient he is. Thinking always ahead, thinking always of trying to do more, brings a state of mind in which nothing is impossible. The moment one gets into the "expert" state of mind a great number of things become impossible.”
Bounded Rationality
“Standard economics assumes that we are rational. But we are far less rational in our decision-making. Our irrational behaviours are systematic and predictable.”
— Dan Ariely
Herbert Simon is famous for coining the term “bounded rationality” which revolutionized how we think about decision-making. His theory challenges the traditional economic assumption of perfect rationality, where individuals are expected to make optimal decisions based on complete information. Instead, Simon emphasized that human decision-making is constrained by cognitive limitations, incomplete information, and environmental factors.
As a matter of fact, Simon’s bonded rationality stems from the simple fact that humans cannot optimize everything. As he explains, “Rationality, then, does not determine behavior. Within the area of rationality behavior is perfectly flexible and adaptable to abilities, goals, and knowledge. Instead, behavior is determined by the irrational and nonrational elements that bound the area of rationality.”
As such, it is clear that Simon’s insight has profound implications for how we should approach decision-making and problem-solving. Recognizing our cognitive limitations encourages us to prioritize, to focus on essential information, and to accept good enough solutions rather than endlessly pursuing an elusive ideal. This doesn't imply settling for mediocrity, but rather recognizing that perfection is often unattainable and sometimes even counterproductive.
“Since my world picture approximates reality only crudely, I cannot aspire to optimize anything; at most, I can aim at satisficing. Searching for the best can only dissipate scarce cognitive resources; the best is enemy of the good.”
— Herbert A. Simon
This concept of bounded rationality is extremely important especially when it comes to making decisions while running a business. As a matter of fact, it is often a necessity for CEOs to make important decisions without having 100% of the information at hand. As we have previously learned from Jeff Bezos, most decisions should be made with 70% of the data you wish you had. If you need to wait for more information before making a decision, you are probably being too slow.
Furthermore, if these decisions are two-way doors, meaning they are reversible, you will always have the chance to course correct a bad decision. As Bezos once said, “If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.” In fact, Bezos is well known to have shared his decision-making process where he separates all decisions into two piles: Type 1 decisions which needs to be made carefully as they irreversible and Type 2 decisions that can be made more quickly as they are reversible. This concept allows one to greatly speed up decision making and to overcome decision paralysis.
“Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.”
— Jeff Bezos
Multidisciplinary Thinking
“If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.”
— Charlie Munger
As we have previously seen, Simon was a real polymath due to his interest in various different fields. As he once said, "I have been interested in many different things—economics (especially industrial organization), political science (especially public administration), psychology (especially cognition), philosophy (especially epistemology), computer science."
Simon’s career is a testament to the power of innovation and interdisciplinary collaboration. He believed that breakthroughs often occur at the intersection of disciplines and that the most significant problems require integrating knowledge from multiple fields. In order to encourage interdisciplinary activity, Simon created the Social Science Research Council at the Carnegie Mellon University where he was a professor. However, he was “was appalled at how often I heard such phrases as, “as a historian, I . . . ,” “as an economist, I . . . ,” “as a sociologist, I . . . ,” and so on. I challenged these phrases each time I heard them, but it was like trying to purge ainnuh (“ Isn’t it so?”) from the lexicon of a native of Milwaukee.”
“The problem is less one of bringing unlike social scientists together than one of bringing unlike social sciences together in one man. There has been failure after failure of interdisciplinary “teams” to integrate anything . . . except to the extent that individual team members became interdisciplinary. I would not give a dollar to assist a typical political scientist to collaborate with a typical economist unless each one of them gave me a sworn statement that he would study seriously and not in a dilettante’s way the discipline of the other for at least a year.”
— Herbert A. Simon
This reminds me of what we have learned from Richard Feynman, the genius physicist who noticed that experts always see and evaluate problems through their own point of view. This can be a bad thing as we can fall into the Man with a Hammer syndrome, meaning that we become biased towards the tools that we possess to solve a problem, regardless of whether such tools are appropriate to the problem at hand.
“Each of us talked about what we thought the “ethics of equality” was, from our own point of view, without paying any attention to the other guy’s point of view. For example, the historian proposed that the way to understand ethical problems is to look historically at how they evolved and how they developed; the international lawyer suggested that the way to do it is to see how in fact people actually act in different situations and make their arrangements; the Jesuit priest was always referring to “the fragmentation of knowledge”; and I, as a scientist, proposed that we should isolate the problem in a way analogous to Galileo’s techniques for experiments; and so on.”
— Richard Feynman
Charlie Munger also believed that people who have a broad mind and who understand many different models from many different disciplines make better decisions. This is mainly because it allows one to have a different box of tools when facing a problem. Peter Kaufman, one of Munger's most vivid followers of his multidisciplinary approach, mentions the reason why it is important to be a multidisciplinary thinker in his speech to the California Polytechnic State University Pomona Economics Club:
“The answer comes from the Austrian philosopher Ludwig Wittgenstein, who said, “To understand is to know what to do.” Could there be anything that sounds simpler than that? And yet it’s a genius line—”to understand is to know what to do.” How many mistakes do you make when you understand something? You don’t make any mistakes. Where do mistakes come from? They come from blind spots, a lack of understanding. Why do you need to be multidisciplinary in your thinking? Because as the Japanese proverb says, “The frog in the well knows nothing of the mighty ocean.” You may know everything there is to know about your specialty, your silo, your “well,” but how are you going to make any good decisions in life—the complex systems of life, the dynamic system of life—if all you know is one well?”
— Peter Kaufman
Beyond the Book
Read "Henry Ford and the Actual Value of Education" by Farnam Street
Read "Reversible and Irreversible Decisions" by Farnam Street
Read "The Multidisciplinary Approach to Thinking" by Farnam Street
Read "Using Multidisciplinary Thinking to Approach Problems in a Complex World" by Farnam Street
Watch "Charlie Munger Commencement Address at USC | 05-13-2007" on YouTube
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