Bio: Gerd Gigerenzer is director of the Max Planck Institute for Human Development in Berlin and professor of psychology at the Free University of Berlin. Until 1995, he directed the Max Planck Institute for Psychological Research in Munich. Professor Gigerenzer has held professorships at the University of Chicago and the Universities of Salzburg, Konstanz, and Munich.
In his numerous publications, Professor Gigerenzer has pioneered a balanced assessment of the methods used by both humans and animals to make inferences about their environment under constraints of time, knowledge, and computational capacities. Models of rational decision making in many fields tend to ignore these constraints and fault real-world agents for their apparently irrational behavior. Gigerenzer has shown that the simple heuristics employed by real-world agents often display a form of “ecological rationality” that lets them outperform even the most complex statistical models. Gigerenzer has also used such insights into the psychology of decision making to improve managerial techniques in operation research, quantitative analysis, and marketing.
His latest publication, Calculated Risks (Simon & Schuster, 2002), has won several prizes and has been translated into German, Japanese, and Chinese. Earlier book publications include Bounded Rationality (with Reinhard Selten, MIT Press, 2001), and Adaptive Thinking (Oxford University Press, 2000).
Gigerenzer is a fellow of the Deutsche Akademie der Naturforscher Leopoldina and the Berlin-Brandenburg Academy of Sciences. He received a diploma in psychology in 1974, a Ph.D. in psychology in 1977, and a habilitation in psychology in 1982, all from the University of Munich.
Expertise: Consumer Responses to Product Innovation
During his tenure as a Batten Fellow, Gerd Gigerenzer will deliver four lectures on his groundbreaking work on bounded rationality. He will also collaborate with Darden faculty host, Matthias Hild, and with Batten Fellow Reinhard Selten to develop applications of behavioral models to the prediction of how consumers choose between competing products. Much of the traditional economic theory of consumer behavior rests on the unrealistic assumption that agents make choices effortlessly and never struggle with constraints on their cognitive abilities, memory, or time. Interdisciplinary efforts have only recently provided behaviorally accurate models that can lead to much-improved predictions of the market share of a new product line. These results, however, have gone unnoticed by the management literature.
Professor Gigerenzer, Professor Hild and Batten Fellow Reinhard Selten will investigate the prediction of consumers’ responses to the introduction of new products by running a set of laboratory experiments that involve choices between different products under suitable financial incentives. They will use the data from these experiments to validate and modify existing models of consumer choice from the psychological literature. On the basis of these results, they will lay the foundations for a novel suite of forecasting tools tailored to the needs of practitioners in marketing and product innovation.
The results of this fellowship will be presented in two academic papers, a practitioner paper, and a CD-ROM that will present both the ideas and methods discussed in the papers as well as video interviews with Professor Gigerenzer and Darden faculty.
Publications & News
Calculated Risks: How to Know When Numbers Deceive You (Simon & Schuster, 2002)
Bounded Rationality: The Adaptive Toolbox (co-editor) (MIT Press; 2001)
Adaptive Thinking: Rationality in the Real World (Oxford University Press, 2000)
Reckoning with Risk: Learning to Live with Uncertainty