AbstractThis article describes the emerging subfield known as behavioral economics, which borrows from psychology, empirically tests assumptions used elsewhere in economics, and provides theories that aim to be more realistic and closely tied to experimental and field data. Highlights from the experimental findings of behavioral economics are discussed. The article remarks critically on the role of empirical realism and continued use of as-if methodology in behavioral economics. Problems in normative behavioral economics are given special attention as debates arise concerning how to interpret empirical findings that contradict standard definitions of axiomatic rationality. Ecological rationality, methodological pluralism, and Simon's notion of bounded rationality are considered.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26587.
Date of creation: 2010
Date of revision:
bounded rationality; ecological rationality; Herbert Simon; as-if; survey;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-CBE-2010-12-18 (Cognitive & Behavioural Economics)
- NEP-EVO-2010-12-18 (Evolutionary Economics)
- NEP-EXP-2010-12-18 (Experimental Economics)
- NEP-HPE-2010-12-18 (History & Philosophy of Economics)
- NEP-NEU-2010-12-18 (Neuroeconomics)
- NEP-PKE-2010-12-18 (Post Keynesian Economics)
- NEP-SOC-2010-12-18 (Social Norms & Social Capital)
- NEP-UPT-2010-12-18 (Utility Models & Prospect Theory)
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