Rationality in Economics

Rationality in Economics

This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of F. A. Hayek: through emergent socio-economic institutions and cultural ...

Author: Vernon L. Smith

Publisher: Cambridge University Press

ISBN: 9781139466462

Category: Business & Economics

Page:

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The principal findings of experimental economics are that impersonal exchange in markets converges in repeated interaction to the equilibrium states implied by economic theory, under information conditions far weaker than specified in the theory. In personal, social, and economic exchange, as studied in two-person games, cooperation exceeds the prediction of traditional game theory. This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of F. A. Hayek: through emergent socio-economic institutions and cultural norms, people achieve ends that are unintended and poorly understood. In cultural changes, the role of constructivism, or reason, is to provide variation, and the role of ecological processes is to select the norms and institutions that serve the fitness needs of societies.
Categories: Business & Economics

Individuals and Identity in Economics

Individuals and Identity in Economics

The idea that individuals are rational per se is a product of what he terms constructivist rationality. ... and then stated more fully in his Rationality in Economics: Constructivist and Ecological Forms (2008), which it seems fair to ...

Author: John B. Davis

Publisher: Cambridge University Press

ISBN: 9781139495462

Category: Business & Economics

Page:

View: 239

This book examines the different conceptions of the individual that have emerged in recent new approaches in economics, including behavioral economics, experimental economics, social preferences approaches, game theory, neuroeconomics, evolutionary and complexity economics, and the capability approach. These conceptions are classified according to whether they seek to revise the traditional atomist individual conception, put new emphasis on interaction and relations between individuals, account for individuals as evolving and self-organizing, and explain individuals in terms of capabilities. The method of analysis uses two identity criteria for distinguishing and re-identifying individuals to determine whether these different individual conceptions successfully identify individuals. Successful individual conceptions account for sub-personal and supra-personal bounds on single individual explanations. The former concerns the fragmentation of individuals into multiple selves; the latter concerns the dissolution of individuals into the social. The book develops an understanding of bounded individuality, seen as central to the defense of human rights.
Categories: Business & Economics

Cognitive Unconscious and Human Rationality

Cognitive Unconscious and Human Rationality

In J. Eatwell, M. Milgate, P. Newman, & I. Erev (Eds.), The new Palgrave dictionary of economics (Vol. 4, pp. ... Rational choice and the structure of the environment. ... Rationality in economics: Constructivist and ecological forms.

Author: Laura Macchi

Publisher: MIT Press

ISBN: 9780262034081

Category: Science

Page: 408

View: 239

Examining the role of implicit, unconscious thinking on reasoning, decision making, problem solving, creativity, and its neurocognitive basis, for a genuinely psychological conception of rationality. This volume contributes to a current debate within the psychology of thought that has wide implications for our ideas about creativity, decision making, and economic behavior. The essays focus on the role of implicit, unconscious thinking in creativity and problem solving, the interaction of intuition and analytic thinking, and the relationship between communicative heuristics and thought. The analyses move beyond the conventional conception of mind informed by extra-psychological theoretical models toward a genuinely psychological conception of rationality—a rationality no longer limited to conscious, explicit thought, but able to exploit the intentional implicit level. The contributors consider a new conception of human rationality that must cope with the uncertainty of the real world; the implications of abandoning the normative model of classic logic and adopting a probabilistic approach instead; the argumentative and linguistic aspects of reasoning; and the role of implicit thought in reasoning, creativity, and its neurological base. Contributors Maria Bagassi, Linden J. Ball, Jean Baratgin, Aron K. Barbey, Tilmann Betsch, Eric Billaut, Jean-François Bonnefon, Pierre Bonnier, Shira Elqayam, Keith Frankish, Gerd Gigerenzer, Ken Gilhooly, Denis Hilton, Anna Lang, Stefanie Lindow, Laura Macchi, Hugo Mercier, Giuseppe Mosconi, Ian R. Newman, Mike Oaksford, David Over, Guy Politzer, Johannes Ritter, Steven A. Sloman, Edward J. N. Stupple, Ron Sun, Nicole H. Therriault, Valerie A. Thompson, Emmanuel Trouche-Raymond, Riccardo Viale
Categories: Science

Social Norms and the Theory of the Firm

Social Norms and the Theory of the Firm

In his 2002 Nobel Prize lecture and his follow-up book, Rationality in Economics: Constructivist and Ecological Forms (Smith 2008), Vernon Smith identifies two forms of rationality emerging from the evidence in experimental economics.

Author: Douglas E. Stevens

Publisher: Cambridge University Press

ISBN: 9781108423328

Category: Business & Economics

Page: 242

View: 288

Demonstrates the importance of social norms to firms and markets through historical context and theoretical and empirical evidence.
Categories: Business & Economics

Smart Economic Decision Making in a Complex World

Smart Economic Decision Making in a Complex World

Behavioral economics research and the foundations of economics. Journal of Socio-Economics, 34, 135–150. Smith, V. L. (2008). Rationality in economics: Constructivist and ecological forms. New York: Cambridge University Press.

Author: Morris Altman

Publisher: Academic Press

ISBN: 9780128114612

Category: Business & Economics

Page: 302

View: 856

Smart Economic Decision-Making in a Complex World is a fresh and reality-based perspective on decision-making with significant implications for analysis, self-understanding and policy. The book examines the conditions under which smart people generate outcomes that improve their place of work, their household and society. Within this work, the curious reader will find interesting open questions on many fascinating areas of current economic debate, including, the role of realistic assumptions robust model building, understanding how and when non-neoclassical behavior is best practice, why the assumption of smart decision-makers is best to understand and explain our economies and societies, and under what conditions individuals can make the best possible choices for themselves and society at large. Additional sections cover when and how efficiency is achieved, why inefficiencies can persist, when and how consumer welfare is maximized, and what benchmarks should be used to determine efficiency and rationality. Makes the case for 'smart and rational' decision-making as a context-dependent rational process that is framed by socio-cultural environment and conditioned by institutional capacities Explains how incorporation of the 'smart' decision-maker concept into economic thought improves our understanding of how, why and when people generate certain outcomes Explores how economic efficiency can be achieved, individual preferences realized, and social welfare maximized through the use of 'smart and rational' approaches
Categories: Business & Economics

Handbook of Behavioural Economics and Smart Decision Making

Handbook of Behavioural Economics and Smart Decision Making

Rational Decision-Making within the Bounds of Reason Morris Altman. Ploug, T., S. Holm and J. Brodersen (2012), ... Smith, V.L. (2008), Rationality in Economics: Constructivist and Ecological Forms, New York: Cambridge University Press.

Author: Morris Altman

Publisher: Edward Elgar Publishing

ISBN: 9781782549598

Category:

Page: 616

View: 234

This Handbook is a unique and original contribution of over thirty chapters on behavioural economics, examining and addressing an important stream of research where the starting assumption is that decision-makers are for the most part relatively smart or rational. This particular approach is in contrast to a theme running through much contemporary work where individuals’ behaviour is deemed irrational, biased, and error-prone, often due to how people are hardwired. In the smart people approach, where errors or biases occur and when social dilemmas arise, more often than not, improving the decision-making environment can repair these problems without hijacking or manipulating the preferences of decision-makers. This book covers a wide-range of themes from micro to macro, including various sub-disciplines within economics such as economic psychology, heuristics, fast and slow-thinking, neuroeconomics, experiments, the capabilities approach, institutional economics, methodology, nudging, ethics, and public policy.
Categories:

Behavioral Economics

Behavioral Economics

(1991) 'Rational choice: The contrast between economics and psychology', Journal of Political Economy, 99: 877–897. ... (2007) Rationality in Economics: Constructivist and Ecological Forms, Cambridge: Cambridge University Press.

Author: Edward Cartwright

Publisher: Routledge

ISBN: 9781351600026

Category: Business & Economics

Page: 556

View: 242

Over the last few decades behavioral economics has revolutionized the discipline. It has done so by putting the human back into economics, by recognizing that people sometimes make mistakes, care about others and are generally not as cold and calculating as economists have traditionally assumed. The results have been exciting and fascinating, and have fundamentally changed the way we look at economic behavior. This textbook introduces all the key results and insights of behavioral economics to a student audience. Ideas such as mental accounting, prospect theory, present bias, inequality aversion and learning are explained in detail. These ideas are also applied in diverse settings such as auctions, stock market crashes, charitable donations and health care, to show why behavioral economics is crucial to understanding the world around us. Consideration is also given to what makes people happy, and how we can potentially nudge people to be happier. This new edition contains expanded and updated coverage of contract theory, bargaining in the family, time and risk, and stochastic reference points, among other topics, to ensure that readers are kept up to speed with this fast-paced field. The companion website is also updated with a range of new questions and worked examples. This book remains the ideal introduction to behavioral economics for advanced undergraduate and graduate students.
Categories: Business & Economics

A Fast and Frugal Finance

A Fast and Frugal Finance

Constructivist and ecological rationality in economics. American Economic Review 93, 465–508. Smith, Vernon, 2008. Rationality in Economics: Constructivist and Ecological Forms. Cambridge University Press. Statman, Meir, 1999.

Author: William P. Forbes

Publisher: Academic Press

ISBN: 9780128124956

Category: Business & Economics

Page: 320

View: 853

A Fast and Frugal Finance: Bridging Contemporary Behavioral Finance and Ecological Rationality adds psychological reality to classical financial reasoning. It shows how financial professionals can reach better and quicker decisions using the 'fast and frugal' framework for decision-making, adding dramatically to time and outcome efficiency, while also retaining accuracy. The book provides the reader with an adaptive toolbox of heuristic tools and classification systems to aid real-world decisions. Throughout, financial applications are presented alongside real-world examples to help readers solve established problems in finance, including stock buying and selling decisions, even in situations of considerable uncertainty and risk. The book concludes by describing potential solutions to financial problems, including discussions on high frequency trading and machine learning algorithms. Demonstrates how well-constructed 'fast and frugal' models can outperform standard models in time and outcome efficiency Focuses on how financial decisions are made in reality rather than how they should be made Discusses how cognition and the decision-making context interact in producing 'fast and frugal' choices Explores the development of decision-making trees in finance to aid in decision-making
Categories: Business & Economics

Why Ethical Behaviour is Good for the Economy

Why Ethical Behaviour is Good for the Economy

'Rationality as a process and as a product of thought', American Economic Review, 70: 1–16. Simon, H.A. (1987). ... Rationality in Economics: Constructivist and Ecological Forms. New York: Cambridge University Press. Sugden, R. (2008).

Author: Morris Altman

Publisher: Edward Elgar Publishing

ISBN: 9781782549451

Category: Business & Economics

Page: 224

View: 393

This timely book offers a nuanced critique of the nudge narrative, and demonstrates why and how ethical behaviour can have significant positive economic and wellbeing outcomes. Morris Altman models a complex alternative to the expectations of ethical behaviour and shows how this behaviour can be consistent with competitive market economies, contrary to what conventional economic theory suggests.
Categories: Business & Economics

Evolving Norms

Evolving Norms

Constructivist and ecological rationality in economics. American Economic Review, 93, 465–508. Smith, V. l. (2008). Rationality in economics: Constructivist and ecological forms. Cambridge, Ma: Cambridge University press. teraji, ...

Author: Shinji Teraji

Publisher: Springer

ISBN: 9781137502476

Category: Business & Economics

Page: 355

View: 823

This book presents institutional evolution and individual choice as codependent results of behavioral patterns. Drawing on F.A. Hayek's concepts of cognition and cultural evolution, Teraji demonstrates how the relationship between the sensory and social orders can allow economists to track social norms and their effects on the global economy. He redirects attention from the conventional focus on what an individual chooses to the changing social order that determines how an individual chooses. Cultural shifts provide the environmental feedback that challenges the mental models governing individual choice, creating a cycle of coevolution. Teraji develops a general framework from which to examine this symbiotic relationship in order to identify predictive patterns. Not just for behavioral economists, this book will also appeal to those who specialize in institutional economics, the philosophy of economics, and economic sociology.
Categories: Business & Economics