The Decision Process in Spatial Context 1 (original) (raw)
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This special double issue of the Journal of Bioeconomics on 'Bioeconomics, Law and Evolutionary Psychology' takes an interdisciplinary approach to studying bounded rationality of economic man in its ecological, social and institutional environments. The contributors to the special issue come from different disciplines: economics, bioeconomics, psychology, and law. Their research interests involve behavioral decision making, evolutionary biology, law-and-economics/new institutional economics, bioeconomics, experimental economics, game theory, corporate law, risk management, artificial intelligence, and more. The special issue presents not only an interdisciplinary effort but also diverse methods of investigation. The laboratory experiments usually have a high degree of control and accuracy but are low in ecological validity. Theoretical modeling is high in generality but low in precision. Field studies possess a high ecological validity but are less controlled. In this issue, the diversity of methods used by these authors-theoretical modeling (see Burnham, and Smith), computer simulations (see Dudey & Todd, Smith, and Wang in Landa and Wang), field work (Landa, in Landa & Wang), demographical analysis (Silverman & Case), and laboratory experiments (see Fiddick & Cummins, Saad & Gill, and Wang in Landa & Wang)-all converge to highlight the importance of knowledge about Homo sapiens in helping us to understand Homo economicus. Mainstream economics and psychology In the center of the mainstream or standard (neoclassical) economic model of decision-making resides the anonymous rational man (Homo economicus) who performs omniscient probability calculations with unlimited cognitive resources, and maximizes expected utility in the face of scarce resources. This hypothetical rational being does all these feats in a world free of institutions and with zero transaction costs. New institutional economics, in the last forty years or so, has criticized mainstream economics and has incorporated concepts of bounded rationality, institutions, and transaction costs. (See Landa & Wang in this issue). In contrast to mainstream economics, psychologists often assume that human learning, memory, and decision-making are constrained by limited mental resources. In their article on the differences between psychological and economical perspectives of human decisions, Zwick, Erev & Budescu (1999, p. 6) wrote: 'Economists assume that environmental resources are scarce but, ironically, consider the mental resources available to the actors whose behavior is modeled to be unlimited. Psychologists, on the other hand, have always been interested in studying the mechanisms that allow humans and other animals to cope with, and adapt to, an environment that is characterized by subjective information overload.'
Cognitive Economics : Foundations and Historical Evolution
The idea that economic behavior can be modelled as rational decision making, dates back to a famous work of Daniel Bernoulli (1738), who explained the limited willingness to engage in gambles on the basis of utility maximization. From this inception, a progressive expansion of the theory of rationality has accompanied a large part of the development of economic analysis during the XIX and the XX century. At the height of his success, culminated with the publication of Theory of Games and Economic Behavior by von Neumann and Morghenstern in 1947, the status of the theory as the microfoundations of economic analysis was seriously called into question. The most important challenges to the theory date in fact to the 1950s, with Allais's paradox (1952) and the empirical study of decision processes in firms conducted by Cyert, Simon and Trow in 1956. On the one hand Simon's approach was criticising, on the basis of field experiments, the scarce realism of the economic theory based on the neo-classical assumption of "olimpyan" rationality, and suggesting the idea of bounded rationality. On the other, the pioneering works by Allais on expected utility theory violations, proved the systematic discrepancy between the predictions of the theory and real behavior in the context of risk . Together with the early experimental studies by John Nash and Reinhard Selten, Maurice Allais' works on rational decision making were at the origin of experimental economics: new sophisticated methods for controlled laboratory experiments grew from their early experiments, and a large set of new experiments extraordinarily reinforced the evidence of the discrepancy between the theoretical predictions and the real human behaviors. The traditional decision making theory therefore appeared more and more analytically poor and insufficient to explain the wide variety of intelligent human behaviors. In Simon' words:
PSL Quarterly Review, 2017
The concept of “bounded rationality” has been influential, controversial and groundbreaking, as is usually happens the case with the most important economic ideas. Over seven decades, an incredible network of new ideas, research methods and perspectives flourished, expanding the original concept to decision-making, psychology, artificial intelligence, organizational sciences, and finance. Behind the developments in these fields lies Simon’s fundamental goal: to progress improve the understanding of human thought processes. In what the following present papers, I will do not attempt an overview of the literature accumulated thus far. Instead, after a brief glance at the years during which the most important pillars of the bounded rationality concept were born, I will reconstruct the historical paths of certain relevant debates. Each of these paths cuts across many different disciplines and includes important intellectual controversies and suggestions fors future perspectives. By following these paths, we will encounter interesting conceptual affinities among between Simon, Keynes, and Schumpeter, originating in the crucial role that all of them attribute to human creativity.
Decision Making: Between Rationality and Reality
2009
Almost by definition decision-making is typical human activity, and therefore important psychological subject. The starting point of its classical conception within psychology could be traced back to economy and mathematic, with ideas of human as rational economic being, and conceptualising decision making as choice between two or more alternatives, and as such being a separate event in space and time. Already in fifties Herbert Simon challenged such a view with his concept of bounded rationality, emerging from the joint effect of internal limitations of the human mind, and the structure of external environments in which the mind operates. During the last decades with the shift to the real word situations where decisions are embedded in larger tasks, becoming so part of the study of action, the lost rational human appeared again as efficient creature in the complex environment. Gigerenzer showed how heuristics help in this process.
The Philosophy of Economic Behavior
Philosophy of Economic Behavior, 2019
Economics aims for greater accuracy in its models and predictions. The human being aims a complete satisfaction of his unlimited desires. How to find the profitable equilibrium of this relationship? This is the question that the Philosophy of Economic Behavior aims to respond, having as focus the homo oeconomicus of flesh and blood with his singular characteristic of “quasi rational” decision-maker, however influenced by emotion. Thinking of the homo oeconomicus from his point of view as an individual in the world, despite all the influences he suffers from being in the world. The purpose of the research was that of defining the point of departure, the very beginning of something that unfolds itself as the questions arise. The possibilities of approach are as much as they allow the act of questioning. After all, philosophizing is always keeping the old themes alive with brand new questions.