Bounded Rationality and Beyond
35.2K views | +5 today
Follow
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!

Decisioni rischiose: quali aree cerebrali attivano?

Decisioni rischiose: quali aree cerebrali attivano? | Bounded Rationality and Beyond | Scoop.it

Guidare con 2 ore di sonno, andare a letto con una persona conosciuta la sera stessa: tutte decisioni rischiose. Quali aree cerebrali attivano?

....... 

In sostanza, i giocatori non rischiavano quando i loro centri di ricompensa erano maggiormente attivi, ma quando non riuscivano a controllare loro stessi. Era come se mancasse un filtro che permettesse di processare in profondità gli stimoli in ingresso.

Quindi sembra che nel prendere una decisione rischiosa ci sia una minore attivazione da parte dei sistemi di controllo. Per esempio, quando si attiva la corteccia cingolata anteriore elabora a livello inconscio le discrepanze motivazionali fra quello che realmente necessita l’individuo e quello che offre l’ambiente circostante. In pratica rileva i conflitti motivazionali fra ciò che vuoi e ciò che ti trovi davanti, producendo quella strana sensazione difficilmente descrivibile a parole.

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

"Nudging" Policy: Behavioral Economics in the Public Square - YouTube

Institute of Politics Forum from October 16, 2013 with Richard Thaler, University of Chicago Booth School of Business, and Cass Sunstein, Harvard University; Moderated by Nava Ashraf, Harvard Business School, and David Gergen, Center for Public Leadership, Harvard Kennedy School.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Fiscal Responsibility And Economic Efficiency:A Functional Approach - Munich Personal RePEc Archive

Fiscal Responsibility And Economic Efficiency:A Functional Approach - Munich Personal RePEc Archive | Bounded Rationality and Beyond | Scoop.it
Abstract

 

In both developed and developing countries, there are basically two main sources of economic instability: exogenous shocks and inappropriate policies. Exogenous shock (terms-of-trade shocks, natural disasters and capital flow reversals) can throw an economy into disequilibrium and therefore require compensatory action. On the other hand, a disequilibrium can be self-induced by poor economic macroeconomic management such as an excessively loose fiscal stance. Therefore, economic crisis are often the result of external shocks and poor management. While the worlds of agriculture are vast, varied and rapidly changing, with the right policies and supportive investments at local, national and global levels, today’s agriculture offers new opportunities to hundreds of millions of rural poor to move out of poverty. Similarly, the construction industry is an essential contributor to the process of development. Roads, dams, irrigation works, schools, houses, hospitals, factories and other construction works are the physical foundations on which development efforts and improved living standards are established. This paper there argued that an efficient and functional fiscal policy can have a direct impact on the poor through the distributional implications of tax policy as well as public spending. However, the genuine reformer is distinguished by courage which is that signal that separates the genuine reformer (undertaking transition) from the weak government (hoping to disguise itself).

 

 

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

Combining the contributions of behavioral economics and other social sciences in understanding taxation and tax reform - Munich Personal RePEc Archive

Combining the contributions of behavioral economics and other social sciences in understanding taxation and tax reform - Munich Personal RePEc Archive | Bounded Rationality and Beyond | Scoop.it
Abstract

 

This paper extends previous work presented at the SABE/IAREP conference at St Mary’s University, Halifax (James, 2009). In the earlier paper it was shown that conventional economic theory is used to make the case for tax reform but does not always adequately incorporate all the relevant factors. However, an approach based on behavioral economics can make the difference between success and failure. In this paper the contributions of other social sciences are also included. Taxation is a particularly appropriate subject to explore the integration of the social sciences since they have all devoted considerable attention to it. It can be seen that different social sciences suggest a range of variables that might be taken into account in addition to those included in mainstream economics. Other social sciences also offer different methodological approaches and consider the possibility of different outcomes of the fiscal process. The paper concludes that it is not easy to integrate the social sciences in a single approach to the study of tax and tax policy. There may also be the risk of encouraging inappropriate integration - researchers operating outside their expertise can produce results that are not helpful. However, comparing the contribution of behavioral economics with those of the social sciences more generally, it can be seen that behavioral economics can offer a framework within which these areas can be examined. Indeed, it may be a useful channel to add the contributions of other social sciences to mainstream economic research.

 

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

Does Akerlof and Shiller's Animal Spirits provide a helpful new approach for macroeconomics?

Downloadable (with restrictions)! Animal Spirits (2009) is a timely and widely appreciated work focusing on the need to incorporate behavioral factors in macroeconomic analysis that draws on a famous reference of John Maynard Keynes. Nonetheless, it has a number of limitations. Those in several chapters are noted. Most important, however, the book does not break down "animal spirits" into its components, and distinguish sufficiently between (1) cognitive, (2) emotional, (3) cultural, and (4) visceral factors, or (5) those emanating from neuroeconomics. There is not enough reference to the advances of behavioral microeconomics and there is no explanation why so little progress has been made in behavioral macroeconomics despite approximately fifteen years of efforts.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

New Study of Improvising Jazz Pianists Shows Similar Brain Circuits Used for Music and Language — PsyBlog

New Study of Improvising Jazz Pianists Shows Similar Brain Circuits Used for Music and Language — PsyBlog | Bounded Rationality and Beyond | Scoop.it

Brain regions that process language are also involved in communicating through music. When jazz musicians are improvising, the areas of the brain activated include those associated with syntax and spoken language, a new brain imaging study finds.The study had jazz musicians ‘trading fours’: which is where musicians each improvise four bars of music (Donnay et al., 2014).

Typically, trading fours is like a conversation. Each player picks up the themes of the other and elaborates, changes or ‘replies’ in some way.

This suggests that trading fours is more than just a metaphorical conversation, it activates the same areas of the brain involved in building sentences.

A fascinating nuance of the study was that although areas associated with syntax were activated, the areas of the brain associated with themeaning of language showed lower activation.

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

IntroductionToDynamicsAndChaosCourse - YouTube

Introduction To Dynamics And Chaos Course from SantaFe
The Complexity Explorer site provides online courses and other educational materials related to complex systems science. The Complexity Explorer project is being developed by the Santa Fe Institute and is funded by a grant from the John Templeton Foundation and by user donations.

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

Human Well-Being and In-Work Benefits: A Randomized Controlled Trial by Richard Dorsett, Andrew J. Oswald :: SSRN

Human Well-Being and In-Work Benefits: A Randomized Controlled Trial by Richard Dorsett, Andrew J. Oswald :: SSRN | Bounded Rationality and Beyond | Scoop.it
Abstract:      
Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.

 

more...
Eli Levine's curator insight, February 18, 2014 11:37 PM

At least this demonstrates what happens when conservative governments come in to take away benefits from those who already have and are actually in need.  How can they draw the conclusion that government benefits hurt, rather than improve quality of life when they yank the benefits out from under the people after only a few lump sums?

 

Silly British.

 

Probably funded by the Conservatives as well.

 

Think about it.

Scooped by Alessandro Cerboni
Scoop.it!

Loss Aversion, Audit Risk Judgments, and Auditor Liability by Jochen Bigus :: SSRN

Loss Aversion, Audit Risk Judgments, and Auditor Liability by Jochen Bigus :: SSRN | Bounded Rationality and Beyond | Scoop.it
Abstract:      
I investigate how different legal regimes affect auditor’s effort and investors’ investment decisions when the auditor is subject to probability weighting and loss aversion, which are two important characteristics of Prospect Theory. Probability weighting encourages an auditor to overrate the audit risk and the likelihood of damages leading to inflated audit fees which could help to explain the BigN audit fee premium. With loss aversion, an auditor is sensitive to the risk of damage compensation and, thus, tends to exert excessive caution which also generates excessive audit fees. Consequently, investors may choose not to hire an auditor and, as a result, may forego an otherwise profitable investment. These effects are more intense with a strict liability regime than with a negligence rule because with the latter, the auditor is not held liable when due care has been exerted. This removes the risk of incurring losses. The paper highlights the robustness of the negligence regime when preferences are unobservable.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

NECSI Executive Education: Antifragility | NECSI

NECSI Executive Education: Antifragility | NECSI | Bounded Rationality and Beyond | Scoop.it

When strong winds blow, don't build walls, but rather windmills: there is a way to turn every bit of adversity into fuel for improvement.

This course introduces the principles of antifragility and complex systems science to explain how organizations and markets respond to volatility. Participants will learn which organizations can be considered fragile or antifragile, why certain patterns and trends matter while others are just noise, and how to create organizations that use volatility, variability, stress and disorder as information for making better decisions. This program does not require a math background.

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

Five insights from the behavioural sciences | Marketing Society Blogger Crawford Hollingworth

Five insights from the behavioural sciences | Marketing Society Blogger Crawford Hollingworth | Bounded Rationality and Beyond | Scoop.it

Marketing Society Bloggers - Five insights from the behavioural sciences which could help to nudge and steer charitable giving - Crawford Hollingworth. 

Many of us want to give (or want to give more) to charity, but we often fail to deliver on our intentions. As with so many of our plans, there can be a gap between what we intend to do and what we actually end up doing and charitable giving is one of the plans that we can easily let slip; it needs some trigger action. These simple behavioural tools such as motivating people to give by telling them that others are giving and how much, or manipulating the anchors and reference points for donations, or giving donors the satisfaction of feeling as if their donation has made a real difference, or playing to the way we discount the future are all powerful ways to increase charitable giving and goal attainment very easily, with few additional costs to bear. These insights are also relevant to nearly all forms of fundraising - from attaining venture capital funding or departmental budgets or maybe even The Behavioural Architects’ fundraising for social projects!

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

Daniel Kahneman changed the way we think about thinking. But what do other thinkers think of him?

Daniel Kahneman changed the way we think about thinking. But what do other thinkers think of him? | Bounded Rationality and Beyond | Scoop.it

Thinking, Fast and Slow was a global bestseller, and had a profound impact on psychology and economics, as these tributes from other leading figures show. 

Steven Pinker is a psychology professor at Harvard University. He is frequently named one of the world's top intellectuals and has twice been a finalist for the Pulitzer prize.

I've called Daniel Kahneman the world's most influential living psychologist and I believe that is true. He pretty much created the field of behavioural economics and has revolutionised large parts of cognitive psychology and social psychology. His central message could not be more important, namely, that human reason left to its own devices is apt to engage in a number of fallacies and systematic errors, so if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek workarounds. That's a powerful and important discovery.

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

Intuition and Decisions

Intuition and Decisions | Bounded Rationality and Beyond | Scoop.it

Workplaces are shifting from task-oriented environments to requiring more complex problem-solving. The way that business leaders made decisions in the past is no longer a guide to making future decisions; adopting a multifaceted approach that goes beyond traditional reasoning alone is fast becoming a crucial business practice. Such complexity allows for creativity and a focus on the role of human intuition in the workplace.

No doubt, data analysis and past results remain crucial to drive business decisions. Yet following gut instinct — even with all of its inherent risks — has pushed many an organization to success. Microsoft Corp. founder Bill Gates was quoted as saying that one often has to rely on intuition. Albert Einstein also was a believer: “The only real valuable thing is intuition,” he once said.

But cultivating and maintaining a work environment that encourages intuitive thought can be a challenge. In a competitive market, when attracting and retaining a quality workforce is necessary to achieve better business results, fostering an environment that leads to increased intuition is essential. Rather than overanalyzing data, which can lead to second-guessing, changing direction or bogging down a project, intuition can push decision-making. 

What Is Intuition?

more...
Eli Levine's curator insight, February 14, 2014 2:24 PM

I wonder if this "task oriented" way of doing business isn't just being eclipsed as we become more aware of the whole that is our world, rather than just the individual parts that make it up.

 

I see a lot of this in our current government set, where there are so many people who are good at tasks but not so many people who are good at arranging and putting tasks and perspectives together to form a whole image.  It's incredibly exhausting having to explain out each little piece of a project to an "S" personality type (from the Myers Briggs Personality Index) and it's frequently those "S" types who get to make the final decisions without having to or being able/comfortable with consulting their intuition.

 

When you fail to comprehend, accept, and work with the whole that is our world, you're more likely to run aground in spite of your accomplishments than if you were to enjoy the view and receive the tasks from "N" personality types.

 

Then again, I honestly don't know where or how I would fit into this world of ignorance and "S" types, who don't, won't and/or can't understand the whole that is our world and their world as well.

 

Silly brains.

 

Think about it.

Scooped by Alessandro Cerboni
Scoop.it!

Behavioral Economics and Tax Policy

Behavioral economics is changing our understanding of how economic policy operates, including tax policy. In this paper, we consider some implications of behavioral economics for tax policy, such as how it changes our understanding of the welfare consequences of taxation, the relative desirability of using the tax system as a platform for policy implementation, and the role of taxes as an element of policy design. We do so by reviewing the logic of specific features of tax policy in light of recent findings in areas such as tax salience, program take-up, and fiscal stimulus.

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

Daniel Kahneman, in conversation with Cass Sunstein - YouTube

On February 3, 2014, Daniel Kahneman, Nobel Prize-winning author of Thinking, Fast and Slow, spoke with Cass Sunstein, Robert Walmsley University Professor in Spangler Auditorium at Harvard Business School.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

Fiscal Austerity, Unemployment and Suicide Rates in Greece - Munich Personal RePEc Archive

Fiscal Austerity, Unemployment and Suicide Rates in Greece - Munich Personal RePEc Archive | Bounded Rationality and Beyond | Scoop.it
Abstract

 

This study examines the effects of fiscal austerity, among other socioeconomic variables, on suicide rates in Greece over the period 1968-2011. Our results suggest that fiscal austerity, higher unemployment rates, negative economic growth and reduced fertility rates, significantly increase suicide rates in Greece, while increased alcohol consumption and divorce rates do not exert any significant influence on suicide rates. Interestingly, the effects of fiscal austerity and economic growth are gender-specific, as fiscal austerity measures and negative economic growth significantly increase male suicide rates, while no significantly effects of fiscal austerity and negative economic growth on female suicide rates could be identified. Finally, the effects of fiscal austerity on suicide rate are also age-specific, affecting mostly the population between the ages of 45 and 89 years. These results have important implications for policy makers, and for the creation and implementation of specialised suicide prevention programs in Greece by national health agencies.

 

 

more...
Eli Levine's curator insight, February 24, 2014 10:06 AM

Indeed, austerity and economic hardship lead to a spiral downward for the society and the economy.  An economy cannot grow without avaiable capital and natural resources and a willingness and desire to do the work that is necessary to produce wealth.

 

Unfortunately, I don't think Greece has either of these prerequisites to growing an economy.  The lack of desire and willingness to work in order to produce wealth, above all, will limit people's willingness to invest in the Greek economy, which will only lead to a continued spiral downward for the Greek people and the Greek economy.  Ultimately, a behavior and attitude change needs to take place amongst the Greek people if they're going to pull themselves out of the rut that they're in.  No sweat equity, no goods and services, no wealth.

 

Sad, for what was one of the forebearers of civilization.  So much for resting on laurels.  So much for the merits of a conservative, past-oriented culture.

 

Think about it.

Scooped by Alessandro Cerboni
Scoop.it!

The contribution of behavioral economics to tax reform in the United Kingdom

The contribution of behavioral economics to tax reform in the United Kingdom | Bounded Rationality and Beyond | Scoop.it
Abstract

This paper examines the contribution of behavioral economics to tax reform by examining two major reforms in the United Kingdom which may be seen as natural experiments – the reform of local taxation and the introduction of value added tax. The case for both was based strongly on mainstream economic analysis but one was a failure and the other a success. The introduction of the local community charge, or ‘poll tax’ as it became known, was such a failure that not only did it have to be repealed but it was also a factor in the downfall of Mrs. Margaret Thatcher as Prime Minister. The introduction of value added tax took more account of behavioral factors and was successful. The paper concludes that a wider approach based on behavioral as well as mainstream economics may have considerable advantages in developing tax policy.

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

Which Investment Behaviors Really Matter for Individual Investors? by Joachim Weber, Steffen Meyer, Benjamin Loos, Andreas Hackethal :: SSRN

Which Investment Behaviors Really Matter for Individual Investors? by Joachim Weber, Steffen Meyer, Benjamin Loos, Andreas Hackethal :: SSRN | Bounded Rationality and Beyond | Scoop.it
Using a European discount broker data set we simultaneously analyze the performance impact of ten measures of investment behavior proposed in the literature. On

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

Agent-Based Computational Economics (Tesfatsion)

Agent-Based Computational Economics

DescriptionAgent-based computational economics (ACE) is the computational modeling of economic processes (including whole economies) as open-ended dynamic systems of interacting agents. Here "agent" refers broadly to a bundle of data and methods representing an entity residing within the dynamic system. Examples of possible agents include: individuals (e.g., consumers and producers); social groupings (e.g., families, firms, communities, and government agencies); institutions (e.g., markets and regulatory systems); biological entities (e.g., crops, livestock, and forests); and physical entities (e.g., infrastructure, weather, and geographical regions). Thus, agents can range from passive system features to active data-gathering decision makers capable of sophisticated social behaviors. Moreover, agents can be composed of other agents, permitting hierarchical constructions.

 
more...
Eli Levine's curator insight, February 22, 2014 1:45 PM

The wave of the future for economic policy making.

 

Think about it.

Scooped by Alessandro Cerboni
Scoop.it!

The Echo Effect: How Repeating People's Words Improves Social Interaction

The Echo Effect: How Repeating People's Words Improves Social Interaction | Bounded Rationality and Beyond | Scoop.it

People who are masters at communication often make good use of repeating back the words they hear from the people they are speaking with.

When people use the same words, it creates less social distance between them and makes them feel more similar to each other. But when people use very different words, it creates more social distance and makes them feel more disconnected from each other.

Psychologists are now calling this the “echo effect.” The basic idea is that by repeating back the words people use, we can benefit our social interactions in a variety of ways.

A recent study published in the Journal of Language and Social Psychologyelaborates on this effect. They found that mirroring people’s words can be very important in building likability, safety, rapport, and social cohesion.

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

Conspiracy Theories

Conspiracy Theories | Bounded Rationality and Beyond | Scoop.it
Cass Sunstein gets a lot of flack from certain groups in the States for the philosophy of Libertarian Paternalism he and Richard Thaler outlined in 'Nudge'.
more...
No comment yet.
Scooped by Alessandro Cerboni
Scoop.it!

5 Reasons to Calm Down Your Analytical Mind

5 Reasons to Calm Down Your Analytical Mind | Bounded Rationality and Beyond | Scoop.it

Our “analytical mind” is the thinking part of our brains. It mostly takes place in the prefrontal cortex, which is associated with complex decision-making, problem solving, critical thinking, and self-monitoring.

Basically, it’s the part of our brains that makes us step back and think, “What should I think here?” or “What should I do here?”

It’s a very important function of a healthy mind, but it’s also not the only function. In certain situations, it can actually be useful to calm down your analytical mind.

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

2.8 The Price of FREE - YouTube

Everybody likes a good discount. And if you were brave enough to go to the mall the past week or so, you probably saw a lot of people enjoying the post-Christmas sales, stuffing their shopping bags full, trying to get as much for their dollars as possible. But if the stuff in question had been free, our favorite behavioral economist Dan Ariely says there might have been a different story. 

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

Dan Ariely » Blog Archive V2 of my online course (Free!) «

Dan Ariely » Blog Archive V2 of my online course (Free!) « | Bounded Rationality and Beyond | Scoop.it

About a year ago we had a course called “A Beginner’s Guide to Irrational Behavior” on coursera.org

Creating the course was a lot of work, but it was also tremendously rewarding to create a community that was so involved in the exploration of human nature, and how to improve the decisions we all make day to day.

In about 4 weeks (March 11th) version #2 of this course will start.  This course will be based on some of the same materials from V1, but it should be an improved version given that in the meanwhile we learned a lot about the nature of online courses.

So, if you are interested, or know someone else who might be interested please pass along this link:  https://www.coursera.org/course/behavioralecon

Looking forward to another exciting course

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

Are people violent by nature? Probably.

Are people violent by nature? Probably. | Bounded Rationality and Beyond | Scoop.it

Do genes make us do it? The idea that human behavior is driven by genes makes many people uncomfortable, and nowhere is the dispute more bitter than when discussing the biological underpinnings of violence.

The war of ideas over violence and human nature has raged since the 1600s, when philosopher Thomas Hobbes first speculated that the "natural condition of mankind" was one of violence and conflict. In the 1700s, Jean-Jacques Rousseau saw things differently. Enthralled with accounts of the New World, he argued that civilization, not nature, shaped the human propensity for violence.

Social scientists have spent the last three centuries embroiled in debate over the degree to which human nature and culture are responsible for war.

In recent decades, biology has entered the fray. Since Jane Goodall first documented the disturbing reality that chimpanzee communities engage in lethal raids against other chimpanzees, evidence has been mounting in support of biological explanations for our species' capacity for warfare. Over the last few years, scientists have converged on something of a consensus: The human propensity for lethal violence against "out-group" members has deep evolutionary roots.

more...
No comment yet.