Bounded Rationali...
Follow
Find
28.4K views | +36 today
Bounded Rationality and Beyond
News on the effects of bounded rationality in economics and business, relationships and politics
Your new post is loading...
Your new post is loading...
Scooped by Alessandro Cerboni
Scoop.it!

▶ Spring 2011 Marc Sumerlin Lecture Series Featuring Prof. Colin Camerer - YouTube

Colin Camerer, of the California Institute of Technology, was the spring lecturer in the Marc Sumerlin Lecture Series. Dr. Camerer discussed how the brain processes and interacts with economic decision making. The lecture and reception were held on Friday, March 4.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Understanding the effects of government spending on consumption

Abstract

Recent evidence suggests that consumption rises in response to an increase in government spending. That finding cannot be easily reconciled with existing optimizing business cycle models. We extend the standard new Keynesian model to allow for the presence of rule-of-thumb consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending.


more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Behavioral economics: A methodological note

When a theory faces a set of facts that are not compatible with its key assumptions, there are several ways it might respond. In response to the challenge posed by behavioral economics, neoclassical economics has attempted numerous different approaches. After briefly reviewing these responses, this paper turns to argue in favor of one of them. 

http://www.gwu.edu/~ccps/etzioni/documents/A407%20behavioral%20economics.pdf

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Behavioral Economics and the Law

This monograph describes and assesses the current state of behavioral law and economics. Law and economics had a critical (though underrecognized) early point of contact with behavioral economics through the foundational debate in both fields over the Coase theorem and the endowment effect. In law and economics today, both the endowment effect and other features of behavioral economics feature prominently and have been applied to many important legal questions.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Making Juries Better: Some Ideas from Neuroeconomics

Making Juries Better: Some Ideas from Neuroeconomics | Bounded Rationality and Beyond | Scoop.it

We Americans love jury trials, in which an accused person is judged by a group of peers from the community. Every citizen, when called, must sit on a jury. For anyone who finds this civic duty a painful chore: Go watch12 Angry Men, A Few Good Men, or any episode of Law & Order. You’ll feel all warm and fuzzy with the knowledge that, though juries don’t always make the right call, they’re our best hope for carrying out justice.

But…what if they aren’t? Juries are made of people. And people, as psychologists and social scientists have reported for decades, come into a decision with pre-existing biases. We tend to weigh evidence that confirms our bias more heavily than evidence that contradicts it.

 
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

The Narrative Fallacy

The Narrative Fallacy | Bounded Rationality and Beyond | Scoop.it
The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Bounded Rationality Summer School at Max Planck, Berlin 2014

Bounded Rationality Summer School at Max Planck, Berlin 2014 | Bounded Rationality and Beyond | Scoop.it
SUMMER INSTITUTE ON BOUNDED RATIONALITY 2014
Date: June 10-17, 2014
Location: Max Planck Institute for Human Development in Berlin, Germany
Application deadline: March 9, 2014.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Applying the insights of behavioural economics will mean better – and cheaper – government

Applying the insights of behavioural economics will mean better – and cheaper – government | Bounded Rationality and Beyond | Scoop.it

Shortly after the Coalition came to power, David Cameron brought a team of civil servants into the Cabinet Office to work on a ground-breaking project under his controversial director of strategy, Steve Hilton The guiding principle – articulated by US economists Richard Thaler and Cass Sunstein in their book, Nudge – is that instead of ordering people around or leaving them alone to behave in ways damaging to themselves or others, the state can “nudge” them into making better decisions by framing their choices differently. Organ donation is a case in point..

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Psychological versus economic models of bounded rationality

Psychological versus economic models of bounded rationality | Bounded Rationality and Beyond | Scoop.it
That the rationality of individual people is ‘bounded’ – that is, finite in scope and representational reach, and constrained by the opportunity cost of time – cannot reasonably be controversial as an empirical matter.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Rivoluzione nella scienza triste: nasce l'economia sperimentale - Greenreport: economia ecologica e sviluppo sostenibile

Rivoluzione nella scienza triste: nasce l'economia sperimentale - Greenreport: economia ecologica e sviluppo sostenibile | Bounded Rationality and Beyond | Scoop.it

L’approccio sperimentale, nel buio epistemologico neoclassico, ha il merito di accendere una lampada di Diogene che possa fare luce sui modelli tradizionali del pensiero economico standard. Il programma di studi cominciato negli anni ’70 da Daniel Kahneman e Amos Tversky segnò una svolta radicale. I due ricercatori, premiati con il premio Nobel del 20021 insieme a Vernon Smith, ebbero il merito di battere una nuova strada che modificò nell’essenza la teoria della scelta razionale.

Da un punto di vista scientifico, il programma di ricerca tradusse rigorosamente le intuizioni del Keynes della Teoria della probabilità (1921). Ciò che l’economista inglese aveva trattato come tantaliche limitazioni all’analisi, visto l’imponderabile ruolo che la soggettività esercita nella valutazione degli eventi incerti, diventò un insieme di vincoli cognitivi al centro di una teoria che si pone l’obiettivo di ribaltare completamente la prospettiva con cui il processo di scelta viene considerato.

- See more at: http://www.greenreport.it/rubriche/rivoluzione-nella-scienza-triste-nasce-leconomia-sperimentale/#sthash.dFUUEzN4.dpuf

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Women and Investing: a Behavioral Finance Perspective

According to new Merrill Lynch research, gender differences among investors tend to be overstated. In fact, the ways in which men and women approach their financial lives are often strikingly similar. Understanding who they are as investors can help women better focus on ways to successfully work toward their personal goals.

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Top Ten Ways to Deal with Behavioral Biases

Top Ten Ways to Deal with Behavioral Biases | Bounded Rationality and Beyond | Scoop.it
We all suffer from cognitive and behavioral biases. How can we best deal with them? 

Pretty much since the day I wrote it, my Investors’ 10 Most Common Behavioral Biases has been the most popular post on this blog.  It still gets a surprising number of hits all these months later.  Due to the pioneering work of Daniel Kahneman and others, nearly everyone in the financial world acknowledges the reality of cognitive and behavioral biases and their impact on people, the markets and life in general. It’s a very popular subject.

Unfortunately, we don’t think that we are susceptible to them personally.

As I have noted before, we all tend to share this foible — the bias blind spot, which is our inability to recognize that we suffer from the same cognitive distortions and behavioral biases that plague other people.  As one prominent piece of research puts it:

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler

Economics can be distinguished from other social sciences by the belief that most (all?) behavior can be explained by assuming that agents have stable, well-defined preferences and make rational choices consistent with those preferences in markets that (eventually) clear. An empirical result qualifies as an anomaly if it is difficult to "rationalize," or if implausible assumptions are necessary to explain it within the paradigm. This column presents a series of such anomalies. Readers are invited to suggest topics for future columns by sending a note with some reference to (or better yet copies  of) the relevant research. Comments on anomalies printed here are also welcome. The address is: Richard Thaler, c/o Journal of Economic Perspectives, Johnson Graduate School of Management, Malott Hall, Cornell University, Ithaca, NY 14853. After this issue, the "Anomalies" column will no longer appear in every issue and instead will appear occasionally, when a pressing anomaly crosses Dick Thaler's desk. However, suggestions for new columns and comments on old ones are still welcome. Thaler would like to quash one rumor before it gets started, namely that he is cutting back because he has run out of anomalies. Au contraire, it is the dilemma of choosing which juicy anomaly to discuss that takes so much time.

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Non-Welfarist Optimal Taxation And Behavioral Public Economics

Research in behavioural economics has uncovered the widespread phenomenon of people making decisions against their own good intentions. In these situations, the government might want to intervene, indeed individuals might want the government to intervene, to induce behaviour that is closer to what individuals wish they were doing. The analysis of such corrective interventions, through taxes and subsidies, might be called 'behavioural public economics'. However, such analysis, where the government has an objective function that is different from that of individuals, is not new in public economics. In these cases the government is said to be 'non-welfarist' in its objectives, and there is a long tradition of non-welfarist welfare economics, especially the analysis of optimal taxation and subsidy policy where the outcomes of individual behaviour are evaluated using a preference function different from the one that generated the outcomes. First of all the object of this paper is to present a unified view of the non-welfarist optimal taxation literature and, second, to present behavioural public economics as a natural special case of this general framework. Copyright 2006 The Authors Journal compilation � 2006 Blackwell Publishing Ltd.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Learning to Learn: fighting cognitive biases

Learning to Learn: fighting cognitive biases | Bounded Rationality and Beyond | Scoop.it
Critical thinking is an increasingly important skill that has been overlooked by many as information becomes more accessible and superfluous.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Toward a neo-Darwinian synthesis of neoclassical and behavioral economics

Abstract

There is a schism within economics between the neoclassical and behavioral schools. A primary cause of the behavioral ascent is the experimental evidence of deviations between actual behavior and the neoclassical prediction of behavior. While behavioral scholars have documented these “anomalies,” they have made little progress explaining the origin of such behavior. This paper proposes a biological and evolutionary foundation for the anomalies of behavioral economics by separating proximate and ultimate causation. Such a foundation may allow for a re-uniting of economics; a neo-Darwinian synthesis of neoclassical and behavioral economics.

  
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Human evolution's creative drive - FT Comment - FT Comment Video - FT.com

Human evolution's creative drive - FT Comment - FT Comment Video - FT.com | Bounded Rationality and Beyond | Scoop.it
Culture, via language and cooperative behaviour, evolves hand-in-hand with our genes. So says Professor Mark Pagel, one of a new breed of evolutionary biologists using their expertise to shed light on human creativity.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Stirling Behavioural Science Blog : Nudge Database

Stirling Behavioural Science Blog : Nudge Database | Bounded Rationality and Beyond | Scoop.it

Update: Here is the latest version of the Nudge Database pdf.

This is a list of empirical ‘nudges’ and their sources with a particular emphasis on those sourced from academic papers. It will be updated regularly. I created it because while there are many interesting papers and websites documenting nudges, there is a lamentable absence of any searchable, central database. If you know of some nudges that I have not included, please let me know by email or Twitter. The nudges listed here are intended as a quick reference: if you are looking for sample sizes and p-values you need to check the original paper. Where possible I have provided links to freely accessible versions of the papers.

more...
Mark Waser's curator insight, December 30, 2013 10:03 AM

I seem to be on a bounded rationality roll . . . . more good info on how nudges and defaults can encourage desirable behavior.

Scooped by Alessandro Cerboni
Scoop.it!

Ayatollah giuridici, Neuroscienza & Fallacia narrativa | Oltre il vuoto relativista

E IN CAMPO GIURIDICO DA CHI SE LE SENTENZE NON SI POSSONO DISCUTERE ?

Su questi temi ci sono alcune pubblicazioni di Gigerenzer del Max Planc che mostra come sia estremamente facile emettere giudizi e sentenze errate. La filosofia del diritto ha iniziato in tempi recenti ad acquisire questi concetti e le conclusioni non sono ancora accettate dalla massa degli addetti ai lavori. Senza contare il crollo del concetto di libero arbitrio.

L’impianto stesso su cui si basa oggi la definizione di norma giuridica sta scricchiolando di fronte a elementi come ad es. la necessità del cervello di creare una catena casuale tra fatti proprio per poter inferire su questi . Tale necessità genera quella che io definisco FALLACIA NARRATIVA ovvero la costruzione di una narrazione che lega e giustifica fra loro fatti non necessariamente collegati ne collegabili

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

In brief...Top of the class

Richard Murphy and Felix Weinhardt

CentrePiece - The Magazine for Economic Performance from Centre for Economic Performance, LSE

Abstract: Boys may be better off not going to the school with high-performing peers, according to research by Richard Murphy and Felix Weinhardt, which explores how much impact there is on later confidence and exam results from where a child ranks in primary school. They find that being ranked in the top quarter of your primary school peers as opposed to the bottom quarter improves later test scores by twice as much as being taught by a highly effective teacher for one year (with boys four times more affected by being top of the class than girls). Non-cognitive skills such as confidence, perseverance and resilience have big effects on achievement.

 
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

The 20 Most Common Logical Fallacies We Fall Victim to Everyday

The 20 Most Common Logical Fallacies We Fall Victim to Everyday | Bounded Rationality and Beyond | Scoop.it

Logical fallacies are errors in our thinking that can often lead to wrong or misguided beliefs.

Of course, none of us are perfect. We don’t have perfect knowledge and we don’t have perfect reasoning. However that shouldn’t stop us from trying to be a little smarter in how we think about the world.

This article provides a quick summary of the 20 most common logical fallacies people fall victim to everyday. You’ll probably find that a lot of these logical fallacies apply to your own thinking, as well as the arguments you have heard others make too.

Try your best to become more aware of these fallacies and hopefully you can work on becoming a smarter thinker in the future.

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

On Emergent Market Phenomena: Heuristic Biases and Rationality in the Evolutionary Domain | EconStreams.com

On Emergent Market Phenomena: Heuristic Biases and Rationality in the Evolutionary Domain | EconStreams.com | Bounded Rationality and Beyond | Scoop.it

Evolutionary psychologists point to a growing relationship between rapid, non-linear change in the human social environment and relative stationarity in individuals’ behavioral dispositions as evidence of  “mismatch” between evolution’s intended purposes and contemporary lifestyle (think Fast food, and pornography). Thisinconsistency dynamic has resulted in the emergence of a series of pervasive cognitive biases which impair long-term rationality (promote adaptively neutral Hyperbolic Discounting, at best) and thus seriously compromise the potential growth and development of modern, global economies—at least relative to some hypothetical yet ideal possible optimum.


more...
No comment yet.
Rescooped by Alessandro Cerboni from Talks
Scoop.it!

Suzana Herculano-Houzel: What is so special about the human brain?

The human brain is puzzling -- it is curiously large given the size of our bodies, uses a tremendous amount of energy for its weight and has a bizarrely dense cerebral cortex. But: why? Neuroscientist Suzana Herculano-Houzel puts on her detective's cap and leads us through this mystery. By making "brain soup," she arrives at a startling conclusion.

 

http://www.ted.com/talks/suzana_herculano_houzel_what_is_so_special_about_the_human_brain.html 


Via Complexity Digest
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Best of 2013: Know Yourself (and How You Make Decisions)

Best of 2013: Know Yourself (and How You Make Decisions) | Bounded Rationality and Beyond | Scoop.it

As I looked back over a year of tweets and blog posts, one theme was perennial: we cannot escape ourselves. What do I mean by that? Behavioral biases inform our investment decisions, regardless of gender, season, or geography With apologies to Joan Didion, 2013 also turned out, somewhat unexpectedly, to be a year of magical (mathematical) thinking.

more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Mental Accounting and Consumer Choice - Richard H. Thaler

A new model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The development of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using the new concept of “transaction utility.” The household budgeting process is also incorporated to complete the characterization of mental accounting. Several implications to marketing, particularly in the area of pricing, are developed.

more...
No comment yet.