IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v29y1996i4p788-810.html

Decision, Contract, and Emotion: Some Economics for a Complex and Confusing World

Author

Listed:
  • W. Bentley MacLeod

Abstract

This essay illustrates that is if Leonard J. Savage's (1972) small world assumption is relaxed, one can construct a theory of bounded rationality that incorporates some of the insights from recent work in cognitive psychology. The theory can be used to explain why contracts are incomplete and the existence of endowment effects in exchange.

Suggested Citation

  • W. Bentley MacLeod, 1996. "Decision, Contract, and Emotion: Some Economics for a Complex and Confusing World," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 788-810, November.
    • Handle: RePEc:cje:issued:v:29:y:1996:i:4:p:788-810
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28199611%2929%3A4%3C788%3ADCAESE%3E2.0.CO%3B2-9
    Download Restriction: only available to JSTOR subscribers
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Mayer, Stefan & Steinhardt, Claudius, 2016. "Optimal product line pricing in the presence of budget-constrained consumers," European Journal of Operational Research, Elsevier, vol. 248(1), pages 219-233.
    3. Gilboa, Itzhak & Postlewaite, Andrew & Schmeidler, David, 2021. "The complexity of the consumer problem," Research in Economics, Elsevier, vol. 75(1), pages 96-103.
    4. Gloria Gennaro & Elliott Ash, 2022. "Emotion and Reason in Political Language," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1037-1059.
    5. Mehrdad Vahabi, 1999. "From Walrasian General Equilibrium to Incomplete Contracts: Making Sense of Institutions," Post-Print halshs-03704424, HAL.
    6. repec:eee:labchp:v:3:y:1999:i:pb:p:2291-2372 is not listed on IDEAS
    7. Hanoch, Yaniv, 2002. ""Neither an angel nor an ant": Emotion as an aid to bounded rationality," Journal of Economic Psychology, Elsevier, vol. 23(1), pages 1-25, February.
    8. Lu Hong & Scott E. Page, 1998. "Diversity and Optimality," Research in Economics 98-08-077e, Santa Fe Institute.
    9. Scott E. Page, 1998. "Uncertainty, Difficulty, and Complexity," Research in Economics 98-08-076e, Santa Fe Institute.
    10. J Foster, 2000. "Is There A Role For Transaction Cost Economics If We View Firms As Complex Adaptive Systems?," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 369-385, October.
    11. Ben-Ner, Avner & Putterman, Louis, 2000. "On some implications of evolutionary psychology for the study of preferences and institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 91-99, September.
    12. James E. Anderson, 1999. "Why Do Nations Trade (So Little)?," Boston College Working Papers in Economics 428, Boston College Department of Economics.
    13. Itzhak Gilboa & Andrew Postlewaite & David Schmeidler, 2015. "Consumer Choice as Constrained Imitation," PIER Working Paper Archive 15-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    14. H. Lorne Carmichael & W. Bentley MacLeod, 1997. "Territorial Bargaining," Boston College Working Papers in Economics 343., Boston College Department of Economics.

    More about this item

    JEL classification:

    • D0 - Microeconomics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:29:y:1996:i:4:p:788-810. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.