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Anchoring in economics: On Frey and Gallus on the aggregation of behavioural anomalies


  • Earl, Peter E.


This paper examines the research area identified by Frey and Gallus (Aggregate Effects of Behavioral Anomalies: A New Research Area, 2014) and the relationship between it and the choices that economists make. It supports the Frey and Gallus view that, as a consequence of individuals employing external inputs rather than relying upon their own judgemental capacities, the quality of decision-making may differ at the market and macro levels from what has been observed in laboratory experiments. It seeks to forestall potential moves by rational choice theorists to argue that such processes, imposed by competitive pressures, will swiftly eliminate anomalous behaviour. But it questions Frey and Gallus's use of conventional rational choice theory as the reference point for judging the quality of real-world decisions. It argues that choice is an activity based on evolving sets of habits and rules, rather than based on given preference systems, and that Frey and Gallus's failure to consider alternative reference points is itself a manifestation of anchoring.

Suggested Citation

  • Earl, Peter E., 2015. "Anchoring in economics: On Frey and Gallus on the aggregation of behavioural anomalies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-25.
  • Handle: RePEc:zbw:ifweej:201521

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    References listed on IDEAS

    1. Neil Kay, 1995. "Alchian and 'the Alchian thesis'," Journal of Economic Methodology, Taylor & Francis Journals, vol. 2(2), pages 281-286.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    3. Sidney G. Winter, 1964. "Economic "Natural Selection" and the Theory of the Firm," LEM Chapters Series,in: Yale Economic Essays, pages 225-272 Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    5. Nathan Berg & Gerd Gigerenzer, 2010. "As-if behavioral economics: neoclassical economics in disguise?," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(1), pages 133-166.
    6. Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter.
    7. Earl, Peter E. & Peng, Ti-Ching & Potts, Jason, 2007. "Decision-rule cascades and the dynamics of speculative bubbles," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 351-364, June.
    8. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, January.
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    1. repec:beh:jbepv1:v:1:y:2017:i:s:p:27-32 is not listed on IDEAS

    More about this item


    heuristics and biases; infinite regress; rationality;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General


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