• Disclosure, Rationality, Judgment, Self-Deception, and Responsibility

A lecture by Suffolk Law School's Jeff Lipshaw

Monday, April 3, 2012
5-6:30pm
10th Floor Large Conference Room (10-100)
73 Tremont St

A lecture by Jeff Lipshaw from Suffolk Law School. His paper deals specifically with disclosure as remedy to the perceived problems of investment decision-making for the purpose of considering more generally the relationship between information and judgment. In the realm of decision-making, why is there so often a disjunction between the reality of facts on the ground and the conclusions our putatively rational minds draw?

Come join the discussion. Part of the Philosophy Department Lecture Series.

 

Full Abstract:

DISCLOSURE, RATIONALITY, JUDGMENT, SELF-DECEPTION, AND RESPONSIBILITY

This paper deals specifically with disclosure as remedy to the perceived problems of investment decision-making for the purpose of considering more generally the relationship between information and judgment. In the realm of decision-making, why is there so often a disjunction between the reality of facts on the ground and the conclusions our putatively rational minds draw? The theoretical and empirical literature suggests that people regularly make what appear less than fully rational decisions, concluding subjectively that they ought to do something that objective observers would conclude is not justified by the "real." The theoretical implication is a flaw in that interface between percept and concept by which subjective minds process objective data of the world. I want to propose an alternative way of approaching that flaw, one that turns less on the insights of behavioral economics that predominate in the legal academic literature than on the insights of philosophers and psychologists who have confronted the issue of self-deception. Investment decisions (including entrepreneurial undertakings) are one prototypical example of the interface between information (the disclosure that is the substance of our percepts) and judgment (the result of the mental assimilation of information and concepts).

My argument is that behavioral psychology and economics fail to come to terms with the implications of the objective data-subjective mind interface. They necessarily require an objective foundational fulcrum (i.e. someone¹s a priori normative assumption of what constitutes rational behavior), but have no answer to the infinite regress that must necessary arise when individuals assess their own rationality. Law and regulation, as means of external behavior modification, struggle with the relationship between objective information and the process of subjective judgment.

In particular, lawyers and regulators continually seek to cure the judgment problem with the disclosure of more information. I challenge that approach, and consider instead the phenomenon of self-deception. Making a judgment involves not only the assimilation of information, but making a decision at a moment in time with consequences thereafter. Given that irreducibility, the primary challenge in decision-making is overcoming self-deception, i.e., gathering the epistemic courage to face the world as it is at the time of the decision, acknowledging the one-way flow of time, retaining the epistemic humility necessary to adapt one's beliefs, and taking personal responsibility for the adaptation of belief necessary to reconcile the world as it becomes with the decision one made in the past.

 

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