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Context, conflict, weights, and identities: some psychological aspects of decision making

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  • Eldar Shafir
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    Abstract

    Experimental psychology provides a drastically different picture of human abilities, motives, and behavior from that which predominates economic analyses. Individual preferences are normatively assumed to be well-ordered and consistent, but descriptively shown to be inconsistent and malleable. Not having at their disposal clear and reliable procedures for assigning values to options, people need to construct their preferences in the context of decision, which is rife with, among other things, conflict, emotion, contextual influences, and shifts in perspective and attention. Like many other traits and behaviors, preference inconsistency is the outcome not of distracted shortcuts or avoidable errors, but of fundamental aspects of mental life that are central to how people process information. Thus, it may help to think of individual decision makers not as faulty economic agents, but as fundamentally different creatures.

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    Bibliographic Info

    Article provided by Federal Reserve Bank of Boston in its journal Conference Series ; [Proceedings].

    Volume (Year): (2003)
    Issue (Month): Jun ()
    Pages:

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    Handle: RePEc:fip:fedbcp:y:2003:i:jun:n:48:x:5

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    Related research

    Keywords: Macroeconomics ; Economics ; Economic policy;

    References

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    1. Shafir, Eldar & Diamond, Peter & Tversky, Amos, 1997. "Money Illusion," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 341-74, May.
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