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Thinking and Feeling


  • Paul M. Romer


Mistakes give us a window into the brain. Just as optical illusions help us understand visual information processing, mistaken choices help us understand decision-making. The mistakes described below suggest that economics can usefully segregate decision mechanisms into two broad categories - those based on thoughts and those based on feelings. Consideration of these mistakes suggests that economists will be better able to interpret the growing body of seemingly anomalous evidence about human behavior if they treat thoughts and feelings more symmetrically.
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Suggested Citation

  • Paul M. Romer, 2000. "Thinking and Feeling," American Economic Review, American Economic Association, vol. 90(2), pages 439-443, May.
  • Handle: RePEc:aea:aecrev:v:90:y:2000:i:2:p:439-443 Note: DOI: 10.1257/aer.90.2.439

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    References listed on IDEAS

    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, Oxford University Press, vol. 69(1), pages 99-118.
    2. Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
    3. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
    4. Daniel Diermeier & Roger B. Myerson, 1994. "Bargaining," Discussion Papers 1089, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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    Cited by:

    1. Lin, Mei-Chen, 2015. "Seasonal affective disorder and investors’ response to earnings news," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 211-221.
    2. Orlando Gomes, . "Volatility, Heterogeneous Agents and Chaos," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
    3. Benjamin E. Hermalin and Alice M. Isen., 1999. "The Effect of Affect on Economic and Strategic Decision Making," Economics Working Papers E99-270, University of California at Berkeley.
    4. Mamatzakis, E, 2013. "Does weather affect US bank loan efficiency?," MPRA Paper 51616, University Library of Munich, Germany.
    5. Feng Li & Venky Nagar, 2013. "Diversity and Performance," Management Science, INFORMS, vol. 59(3), pages 529-544, September.
    6. Dietrich, Franz & List, Christian, 2016. "Mentalism Versus Behaviourism In Economics: A Philosophy-Of-Science Perspective," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 249-281, July.
    7. repec:spr:grdene:v:23:y:2014:i:6:d:10.1007_s10726-013-9371-5 is not listed on IDEAS
    8. Narayan, Paresh Kumar & Rath, Badri Narayan & Prabheesh, K.P., 2016. "What is the value of corporate sponsorship in sports?," Emerging Markets Review, Elsevier, vol. 26(C), pages 20-33.
    9. Edi Karni & Tim Salmon & Barry Sopher, 2008. "Individual sense of fairness: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 11(2), pages 174-189, June.
    10. J. Atsu Amegashie & Marco Runkel, 2012. "The Paradox of Revenge in Conflicts," Journal of Conflict Resolution, Peace Science Society (International), vol. 56(2), pages 313-330, April.
    11. Benjamin Hermalin & Alice Isen, 2008. "A model of the effect of affect on economic decision making," Quantitative Marketing and Economics (QME), Springer, vol. 6(1), pages 17-40, March.
    12. Dietrich, Franz & List, Christian, 2016. "Mentalism Versus Behaviourism In Economics: A Philosophy-Of-Science Perspective," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 249-281, July.
    13. Cao, Melanie & Wei, Jason, 2005. "Stock market returns: A note on temperature anomaly," Journal of Banking & Finance, Elsevier, vol. 29(6), pages 1559-1573, June.
    14. repec:hal:wpaper:halshs-01249632 is not listed on IDEAS
    15. Edward L. Glaeser, 2002. "The Political Economy of Hatred," NBER Working Papers 9171, National Bureau of Economic Research, Inc.
    16. Lucy F. Ackert & Bryan K. Church & Richard Deaves, 2003. "Emotion and financial markets," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 33-41.
    17. Anastasios Koukoumelis & M. Vittoria Levati, 2012. "An experiment investigating the spill-over effects of voicing outrage," Jena Economic Research Papers 2012-007, Friedrich-Schiller-University Jena.
    18. Edward L. Glaeser, 2004. "Psychology and the Market," American Economic Review, American Economic Association, vol. 94(2), pages 408-413, May.
    19. Stracca, Livio, 2004. "Behavioral finance and asset prices: Where do we stand?," Journal of Economic Psychology, Elsevier, vol. 25(3), pages 373-405, June.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General


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