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Bounded Rationality: Psychology, Economics And The Financial Crises

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  • Daniele SCHILIRÒ

    ()
    (Department SEAM, University of Messina, Italy)

Abstract

This contribution focuses on the concept of bounded rationality, highlighting the role of psychology in the economic decisions. The work analyzes Simon's approach and his notion of bounded rationality as procedural rationality. Moreover, it examines some major contributions of behavioral economics concerning cognitive biases, stressing the importance of the institutional structure in the decision process. The paper also surveys the literature of behavioral finance which has become fashionable in explaining the anomalies of financial markets, pointing out also its limits.

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Bibliographic Info

Article provided by ASERS Publishing in its journal Theoretical and Practical Research in Economic Fields.

Volume (Year): IV (2013)
Issue (Month): 1 (July)
Pages: 97-108

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Handle: RePEc:srs:tpref1:6:v:4:y:2013:i:1:p:97-108

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Web page: http://www.asers.eu/journals/tpref.html

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Keywords: Bounded rationality; rational choice; behavioral economics; behavioral finance; risk aversion;

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Cited by:
  1. Schilirò, Daniele, 2012. "Bounded rationality and perfect rationality: psychology into economics," MPRA Paper 41663, University Library of Munich, Germany.

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