Laplace's Theories of Cognitive Illusions, Heuristics, and Biases

Abstract

In his book from the early 1800s, Essai Philosophique sur les Probabilités, the mathematician Pierre-Simon de Laplace anticipated many ideas developed in the 1970s in cognitive psychology and behavioral economics, explaining human tendencies to deviate from norms of rationality in the presence of probability and uncertainty. A look at Laplace's theories and reasoning is striking, both in how modern they seem and in how much progress he made without the benefit of systematic experimentation. We argue that this work points to these theories being more fundamental and less contingent on recent experimental findings than we might have thought.

Keywords: Heuristics, Biases, Laplace, Behavioral Economics, Psychology

JEL Classification: B1, B4, D03, D81