Today, I was directed towards a great speech by Andrew Haldane titled “The dog and the frisbee“. One quote in particular caught my eye as a great summary for the paper:
Take decision-making in a complex environment. With risk and rational expectations, the optimal response to complexity is typically a fully state-contingent rule (Morris and Shin (2008)). Under risk, policy should respond to every raindrop; it is fine-tuned. Under uncertainty, that logic is reversed. Complex environments often instead call for simple decision rules. That is because these rules are more robust to ignorance. Under uncertainty, policy may only respond to every thunderstorm; it is coarse-tuned.
The paper goes on to cite several examples that promote simple heuristics over complex rules under uncertain and complex environments. To quote: “Less is more, at least without much (much) more data.”
I highly recommend the read.