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Making Decisions: Lessons from Behavioural Economics

In: Socialism with a Human Face

Author

Listed:
  • Gary B. Magee

    (Monash University)

  • Wayne Geerling

    (Monash University)

Abstract

This chapter provides a brief overview of some of the key findings of behavioural economics. Particular attention is devoted to the question of how decisions are made and implemented in complex systems, such as planned economies. The main goal of the chapter is to introduce the concepts and terminology used in subsequent chapters. The topics discussed include inter alia prospect theory, loss aversion, the possibility effect, the certainty effect, framing, mental accounting, and information cascades. These concepts are contrasted with those generated by expected utility theory, the approach more traditionally applied to decision making in economics and economic history. The implications of these differences for our understanding of behaviour within a command economy are considered.

Suggested Citation

  • Gary B. Magee & Wayne Geerling, 2022. "Making Decisions: Lessons from Behavioural Economics," Palgrave Studies in Economic History, in: Socialism with a Human Face, chapter 0, pages 19-57, Palgrave Macmillan.
    • Handle: RePEc:pal:palscp:978-981-19-0664-0_2
    DOI: 10.1007/978-981-19-0664-0_2
    as

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