Cognitive biases in seven strategic decisions that led to Culloden
HERBERT SIMON was awarded the Nobel Prize for Economics in 1976 for (to quote the Nobel citation) “his pioneering research into decision-making processes within economic organisations”. One of the publications that won him this accolade was a seminal paper published in 1955 entitled “A behavioural model of rational choice”[ii], in which he posited that, in making decisions, humans may not optimise in the way set out in economic textbooks, but rather “satisfice”.
“Satisfice” was a neologism he invented by combining two words – “satisfy” and “suffice”. Simon’s central thesis was that our decisions may not be optimal, but are “good enough” to achieve our objectives, working within a framework of what Simon termed “bounded rationality”. That is to say, our decisions are rational, but within bounds set by limited time and information.
The most influential figure in developing Simon’s notion of “bounded rationality” into a distinct field of behavioural economics, analysing systematic biases in decision-making, was Daniel Kahneman, winner of the Nobel Prize in Economics in 2002, who was also awarded the Presidential Medal of Freedom, America’s highest civilian honour, in 2013. The previous year, Kahneman published his ideas in a best-selling book, Thinking, Fast and Slow, whose title derives from his thesis that human beings have two systems of thought:
System 1: “thinking fast”. The system used when we have to make quick decisions, and
System 2: “thinking slow”. This is an analytical and methodical mode of thought, better adapted for big strategic decisions, such as buying a car or a house, when we have time to think through problems slowly and systematically.
Kahneman concluded that, in making fast decisions, we use heuristics or rules of thumb to guide our choices. A central point that underpins the theory Daniel Kahneman developed with his colleague Amos Tversky, which they termed ‘Prospect Theory’, is that the choices we make depend on how we frame the question, and how we view the impact on a particular choice on our future prospects. Will the choice we make offer us better prospects in the future, or will it pose a risk of loss that is better avoided?
Decision No. 1. July 1745: Confirmation bias and the decision to instigate the rising.
Which brings us to the first major decision of the Rising of 1745 – the decision taken by Prince Charles Edward Stuart in the Summer of 1745 to launch an expedition to Scotland. Clearly, he believed that this expedition would enhance his prospects, and the prospects of his dynasty and supporters.
What led him to believe this? A clue is to be found in the opening words of the Narrative of John William O’Sullivan, the Prince’s right-hand man, who comments as follows:
“John Murray of Broughton’s arrival at Paris …..assured him, I am told, that the King’s friends (that is to say, supporters of a Stuart Restoration) would receive him with open arms and that he did not even doubt but they would surprise all the Forts and Castles of Scotland, which would procure him arms and ammunition, and by those means he would be Master of Scotland without being obliged to draw a sword. This was certainly encouragement enough for a young Prince.”[iii]
This is an example of what psychologists term Confirmation Bias – the tendency we have to seek out information supporting our prior beliefs, thus confirming our views and leading to the risk of groupthink, in which people in groups experience powerful pressures to conform and suppress dissenting views, leading to flawed judgements.
So how can we avoid falling into the Confirmation Bias trap? By consciously seeking out diverse opinions from informed and dispassionate individuals – not sycophants like Murray of Broughton who told the Prince what he wanted to hear. For example, the Prince could have consulted his own father, James Francis Edward Stuart, whom he hoped to put on the throne, or his principal potential ally, King Louis XV of France and his Ministers. He did not do so, in my view, because he knew what they would say. They would have counselled him against launching an expedition at that time, instead advocating a wait for more propitious circumstances.
Decision No. 2. August 1745: Loss aversion and the decision to continue the rising after the loss of the ‘Elisabeth’.
The Prince’s expedition ran into difficulty almost from the start, with the loss of the ‘Elisabeth’, carrying most of his weapons and ammunition and his army of volunteers from the Irish Clare Regiment, when they engaged with HMS Lyon during the crossing to Scotland. Many men were lost and the ‘Elisabeth’ limped back to the continent badly damaged, carrying most of the Prince’s arms, munitions and men with it.
The Prince continued to sail for Scotland with just seven leading supporters on a second ship, the ‘Du Teillay’. On landing in Scotland, the Prince was told “that he should go home and wait for a more favourable occasion.”[iv] O’Sullivan says that “everybody was struck as with a thunderbolt” to hear this. The Prince’s famous response was “I am come home, and have no intention of returning from whence I have come”. O’Sullivan states that he supported the Prince’s decision because he feared that, if the Prince abandoned his campaign at that point, his credibility would be destroyed.
This is an example of Loss Aversion. As Kahneman and Tversky put it, “In human decision making, losses loom larger than gains.” It is also an example of what economists term the “Sunk Costs Fallacy” – the failure to cut our losses, instead throwing good money after bad and making an ever increasing commitment of time, money and resources in failing projects in an attempt to salvage some value from the investment that has already been made.
So what should be done to counter Loss Aversion and the Sunk Cost Fallacy? The correct approach is to write off what has already been committed, start with a blank sheet of paper and make an entirely new decision based on current circumstances.
If this exercise had been undertaken, the answer would almost certainly be the same as that given to the Prince by everyone other than O’Sullivan: to go back to France, regroup, consolidate your resources and await a more favourable opportunity to launch another campaign.
Decision No 3: Decision framing, the Allais Paradox and the advance into England.
After Glenfinnan, the Jacobite Army commenced its advance onto Edinburgh, securing a victory against the odds at Prestonpans, and then, on October 30th 1745, taking the next fateful decision – to advance south into England, a strategy advocated by the Prince. The Army’s senior military commander, Lord George Murray, proposed an alternative strategy of remaining in Scotland and consolidating their position.
In the terminology of modern decision theory, Lord George and the clan leaders who supported him applied a Maximin strategy – aiming to hold what they had already won. By contrast, Prince Charles and his supporters applied a Maximax strategy – seeking to maximise possible gains, and prepared to take additional risks to achieve that.
In their Prospect Theory, Kahneman and Tversky built upon the research of Maurice Allais, winner of the Nobel Prize for economics in 1988, who showed that, if a question is framed in terms of potential losses, the answer may be directly contradictory to the answer that would be given if it is framed in terms of possible gains. This is the Allais Paradox. As Daniel Kahneman observed,
“An investment said to have an 80% chance of success sounds far more attractive than one with a 20% chance of failure. The mind can’t easily recognize that they are the same.”
At Holyrood, the Prince framed the choice in terms of the potential gains from an advance, while Lord George framed it in terms of possible losses and risks.
How do we overcome these potential framing biases?
One method is to change the decision criterion itself. Almost a century ago, the mathematical genius John von Neumann defined a third decision criterion – the Minimax Criterion. Von Neumann concluded that we should choose the option that minimises the chance of any future regrets – “don’t die wondering what might have been.”
In the circumstances that prevailed in late October 1745, the Jacobites’ Minimax Option was to advance into England.
Decision No 4: December 5th 1745: Ambiguity Aversion, the Ellsberg Paradox and the decision to retreat from Derby
We now come to perhaps the most fateful decision during the entire campaign – the decision taken in Derby on December 5th 1745, to abort the advance and turn back to Scotland. The decision that the Jacobites faced in Derby was whether to go forward to London, not knowing what to expect there, or go back home to Scotland, and their homes, where they knew what to expect.
This is an example of Ambiguity Aversion: people don’t want to bet on situations in which the probabilities are not known. The Ellsberg Paradox, as shown by Daniel Ellsberg, is that we may irrationally change our decisions just in order to avoid such ambiguity. “Decisions under conditions of uncertainty are not difficult because of what we know; they are difficult because of what we don’t know.”
So the Jacobite leaders did exactly what the Ellsberg Paradox said they shouldn’t do: they changed their minds in the middle of the campaign. In Kahneman’s terminology, they were thinking fast – in the vernacular, panicking – when they should have been thinking slow.
So what could they have done?
What they could have done is sought to secure more information on what the actual situation was in London. In the words of the military adage, “Time spent in reconnaissance is rarely wasted.” It would have been a fairly straightforward matter for the Jacobites to have held their position in Derby for a few days, while sending forward an advance party to gain more information on what lay ahead, before arriving at a final decision.
Decision No 5: December 19th 1745: The Endowment Effect and the Decision to leave a garrison in Carlisle
During the Jacobite retreat, the next major decision was to leave a garrison of 400 men in Carlisle. This proved to be a useless sacrifice, with most of the officers and NCOs of the Manchester Regiment executed or dying through starvation or disease in the cells of Carlisle.
The decision to leave a garrison at Carlisle is an example of another behavioural bias – the Endowment Effect, as defined by Nobel Laureate Richard Thaler [v] to describe a particular form of Loss Aversion: “what we have, we hold”. Or as Aristotle wrote almost two and a half thousand years ago,
“Most things are differently valued by those who have them and by those who wish to get them: what belongs to us, and what we give away, always seems very precious to us.” – The Nicomachean Ethics, Book IX
The correct question should have been – how many men would we be prepared to sacrifice for Carlisle, if we didn’t already occupy it? And the correct answer was that given by Lord George Murray – none, because at that stage of the campaign, Carlisle was of little strategic advantage to the Jacobites.
Decision No 6: February 1746: The Affect Heuristic and the retreat north after Falkirk
So while the unfortunate Carlisle Garrison was left to a cruel fate, the main body of the Jacobite Army retreated north back to Scotland and scored another victory over government forces at Falkirk Muir on January 17th 1746, but failed to press home its advantage. In part, this was because of appalling weather conditions; in part, because of misfortune, with Prince Charlie struck down by bronchial pneumonia after spending 18 hours without food in freezing conditions on the day of the battle. A further factor that caused problems within the Jacobite Army was the accidental killing of the Colonel of the Glengarry Regiment
By the time these issues had been resolved, the Jacobite high command decided that their best option was to abandon central Scotland and retreat northwards into the Highlands.
This is an example of the Affect Heuristic – we often make decisions based on how they affect us and how we feel about them [vi]. The clan chiefs felt instinctively safer in their homelands than further south. [vii]
The way to counter the Affect Heuristic is to seek dispassionate advice from someone independent, with your best interests at heart, but not affected by the emotional factors that may cloud the decision – a “critical friend” or a “devil’s advocate.”.
Decision No 7. April 1746: Optimism Bias, the night march on Nairn and the decision to s§tand at Culloden
And so we come to the final chapter of the story of the Rising of 1745 – the night march on Nairn on April 15th and, after it had been aborted, the decision to stand at Culloden the following day.
These are examples of perhaps the best known of all cognitive biases – Optimism Bias – the tendency of human beings to over-estimate the ease with which they will achieve their objectives and underestimate potential obstacles that may lie in the way.
Lord George and the Prince agreed on April 15th to launch a night march to attack Cumberland’s position at Nairn under cover of darkness. However, the time it took to march to Nairn over rough terrain under cover of darkness was badly underestimated, and by the time dawn broke Lord George’s column had become separated from that of Prince Charles, and Lord George then took the unilateral decision to abort the night march.
The following day the Jacobite Army made its last stand against Cumberland’s Redcoats on Culloden Moor. As the Jacobite soldiers awaited their final battle on that bitterly cold morning, they were starving, poorly armed and physically exhausted. Yet Prince Charlie was apparently convinced that his Highland Army was invincible.
The decision to fight under such circumstances was an egregious example of Optimism Bias.
There was an alternative strategy – that advocated by Lord George Murray, of withdrawing into the mountains to fight a guerrilla campaign, rather than seeking to fight on the flat, boggy land of Drumossie Moor, terrain that precluded the possibility of an effective Highland Charge.
To guard against Optimism Bias decision makers should systematically list possible sources of risk and uncertainty, assess their potential negative impact, and consider methods by which they can be mitigated. A final decision about what to do should only be taken when this exercise is completed.
Summary and Conclusions
At the time of the Rising of 1745 Prince Charles Edward Stuart appears to have been a leader of considerable courage, audacity, and clarity of vision; a young man of twenty-four whose powers of persuasion were such that, landing on the west coast of Scotland with just seven men, he was able to raise a volunteer army that went on to defeat the regular British Army at Prestonpans, Clifton Moor and Falkirk Muir. Had that army advanced from Derby on to London, who knows, it might have succeeded in pulling off the most remarkable coup in British history.
What ultimately destroyed the Prince, however, was not any external force, but rather a fundamental flaw in his own character which I term “Bonnie Prince Charlie Syndrome” – the propensity to see the world, not as it truly is, but as one would wish it to be – symptoms of which include Confirmation Bias, Loss Aversion, Optimism Bias and other cognitive biases that affected key decisions taken during the campaign and led to the tragedy that occurred at Culloden 277 years ago.
In closing; advances in behavioural psychology and decision theory have greatly enriched our understanding of finance and economics in recent years. The legacy of Nobel Prize Winners Herbert Simon, Maurice Allais, Daniel Kahneman, Richard Thaler and other great thinkers help us understand why human beings make poor choices. Their ideas could also be applied with advantage to the study of history, in the hope that greater understanding of why mistakes were made in past could improve the choices made by our leaders today and help to shape a better future for us all.
The above is the 2023 Annual Culloden Lecture by Michael Nevin [i] given at the National Trust for Scotland’s Visitor Centre at Culloden on April 14th 2023
[i] Michael Nevin has been Chair of The 1745 SCIO since 2016 and is the author of Reminiscences of a Jacobite (Birlinn, 2020).
[ii] Herbert Simon, “A behavioral model of rational choice”, Quarterly Journal of Economics, Vol. 69, No. 1 (Feb., 1955)
[iii] O’ Sullivan’s Narrative is published in 1745 and After by Alistair Tayler and Henrietta Taylor, Thomas Nelson and Sons, 1938. The quotation is from the opening lines of the Narrative, pp. 45-46
[iv] O’ Sullivan’s Narrative in 1745 and After by Alistair Tayler and Henrietta Taylor, Thomas Nelson and Sons, 1938, p. 53
[v] Kahneman, Daniel, Jack L. Knetsch, and Richard H. Thaler. “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias.” Journal of Economic Perspectives, 1991, 5 (1): 193-206.
[vi] Zajonc, R. B. “Feeling and thinking: Preferences need no inferences”. American Psychologist, 1980, 35 (2): 151–175.
[vii] Finucane, M.L.; Alhakami, A.; Slovic, P.; Johnson, S.M. “The Affect Heuristic in Judgment of Risks and Benefits”. Journal of Behavioural Decision Making. January 2000, 13 (1): 1–17.