An exploratory analysis of composite choices: Weighing rationality versus irrationality
AbstractHumans are engineered neurologically to make rational and irrational choices. This paper introduces a new paradigm for decision making – a composite choice model – in which economic agents are constantly weighing rationality versus irrationality when encountering options. In an exploratory, deterministic, two-period model, an assumption of a two-way cross-embedment (i.e., a two-way interaction between the rational and irrational components) results in a paradoxical phenomenon, an outcome of either tending toward bliss or abyss at the end of the first period. This implies, for instance, a psychological struggle between two selves within the mind. The paradigm proposed is compared to the dual-process theories recently developed by the cognitive sciences. Future research will explore implications for public policy design and implementation.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).
Volume (Year): 40 (2011)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/620175
Composite choices; Inclination to rationality; Irrationality; Cross-embedment; Abysmal trap;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D00 - Microeconomics - - General - - - General
- D90 - Microeconomics - - Intertemporal Choice - - - General
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