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Diversity In Economic Decision-Making And Behaviour: A New Brief Review

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  • Clement A. Tisdell

    (School of Economics, University of Queensland, Australia)

Abstract

Taking into account the relevant literature, it is argued in this review that important advances can be made in the application of decision sciences to economics if greater attention is given to the presence of diversity in the types of economic decisionmaking and behaviour. This is of particular significance for understanding market dynamics. This requires both rational and irrational types of decision-making to be taken into account. A limitation of neoclassical and much mainstream economic theory in its lack of consideration of this diversity and its economic consequences. Different types of rational and irrational choices are specified in this article. Even rational decision-making and behaviour can be quite diverse. Empirical evidence is provided of diversity in economic decision processes and the consequences of this diversity is noted. Most attention is paid to the influence on the dynamics and stability of market systems of the diversity of the beliefs and behaviour of market participants. It is shown how a preponderance of sticky decision-making or restrained reactions in markets can improve the dynamics of their adjustment when market equilibrium alters or a market is disturbed but its equilibrium remains unchanged. It is observed that these reactions can be socially beneficial. Several different restrained forms of decision-making and behaviour are identified which make for stickiness in market behaviour and decision-processes.

Suggested Citation

  • Clement A. Tisdell, 2018. "Diversity In Economic Decision-Making And Behaviour: A New Brief Review," Advances in Decision Sciences, Asia University, Taiwan, vol. 22(1), pages 351-368, December.
    • Handle: RePEc:aag:wpaper:v:22:y:2018:i:1:p:351-368
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    References listed on IDEAS

    as
    1. Clement A. Tisdell, 2013. "Competition, Diversity and Economic Performance," Books, Edward Elgar Publishing, number 13026.
    2. Timo Henckel & Gordon D. Menzies & Peter G. Moffatt & Daniel J. Zizzo, 2022. "Belief adjustment: a double hurdle model and experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 26-67, February.
    3. Lasselle, Laurence & Svizzero, Serge & Tisdell, Clem, 2005. "Stability And Cycles In A Cobweb Model With Heterogeneous Expectations," Macroeconomic Dynamics, Cambridge University Press, vol. 9(5), pages 630-650, November.
    4. Menzies Gordon Douglas & Zizzo Daniel John, 2009. "Inferential Expectations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-27, December.
    5. Stefania Sitzia & Jiwei Zheng & Daniel Zizzo, 2015. "Inattentive consumers in markets for services," Theory and Decision, Springer, vol. 79(2), pages 307-332, September.
    6. Lasselle, Laurence & Svizzero, Serge & Tisdell, Clement Allan, 2001. "Diversity, Globalisation and Market Stability," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 54(3), pages 385-399.
    7. Lasselle, Laurence & Svizzero, Serge & Tisdell, Clement Allan, 2001. "Diversity, Globalisation and Market Stability," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 54(3), pages 385-399.
    8. Clem Tisdell & Clevo Wilson, 2012. "Nature-based Tourism and Conservation," Books, Edward Elgar Publishing, number 13773.
    9. Clem Tisdell, 1996. "Bounded Rationality and Economic Evolution," Books, Edward Elgar Publishing, number 960.
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    More about this item

    Keywords

    Economic attentiveness; economic diversity; market dynamics; market stability; rationality; sticky decisions;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E7 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics

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