Economics and Epicycles

2020 ◽  
pp. 174569162095378
Author(s):  
Satoshi Kanazawa
Keyword(s):  
Behavioral Economics ◽  
Human Behavior ◽  
Evolutionary Biology ◽  
Cognitive Biases ◽  
Behavioral Economic ◽  
Nonhuman Animals ◽  
Human Actors ◽  
Economic Studies

I aver that standard economics as a model of human behavior is as incorrect in 2017 (after Thaler) as geocentrism was as a model of celestial behavior in 1617 (after Galileo). Behavioral economic studies that have exposed the paradoxes and anomalies in standard economics are akin to epicycles on geocentrism. Just as no amount of epicycles could salvage geocentrism as a model of celestial behavior because it was fundamentally incorrect, no amount of behavioral economic adjustments could salvage standard economics as a model of human behavior because it is fundamentally incorrect. Many of the cognitive biases exhibited by humans are shared by other species, so not only are human actors Humans (as opposed to Econs), but nonhuman animals as phylogenetically distant from humans as ants and locusts are also Humans. Evolutionary biology as a model of human behavior can explain many of the hitherto unexplained cognitive biases and provide a unifying model of human behavior currently lacking in behavioral economics.

Adaptive Biases

2020 ◽  
pp. 12-28
Author(s):  
Dominic D. P. Johnson
Keyword(s):  
Social Science ◽  
Evolutionary Psychology ◽  
Human Behavior ◽  
Scientific Theory ◽  
Cognitive Biases ◽  
Relative Influence ◽  
Rational Actor ◽  
Sources Of Variation ◽  
Human Actors ◽  
Better Than

This chapter explores the notion of adaptive biases and strategic instincts in more detail and compares social science and life science approaches to understanding human behavior. It explains why cognitive biases evolved in the evolutionary past, whether they continue to be adaptive today, and why a bias can be better than accuracy. It also mentions that historians disagree on the relative influence of individual human actors in how history unfolds, while other historians dispute the fact that many or a majority of the most important figures across the ages do not fit the model of a perfectly rational actor. The chapter offers insights, predictions, and sources of variation that unifies a scientific theory to understand the origins, causes, and consequences of human cognitive and behavioral biases. It draws on evolutionary psychology to make two core arguments: cognitive biases are adaptations and cognitive biases are strategic.

scholarly journals How Behavioral Economics and Nudges Could Help Diminish Irrationality in Suicide-Related Decisions

2019 ◽  
Vol 15 (1) ◽  
pp. 44-61 ◽  
Author(s):  
Brian W. Bauer ◽  
Daniel W. Capron
Keyword(s):  
Decision Making ◽  
Suicide Attempt ◽  
Behavioral Economics ◽  
Bounded Rationality ◽  
Suicide Prevention ◽  
Cognitive Biases ◽  
Confirmation Bias ◽  
Computational Power ◽  
Behavioral Economic ◽  
New Evidence

People regularly make decisions that are not aligned with their own self-interests. These irrational decisions often stem from humans having bounded rationality (e.g., limited computational power), which produces reliable cognitive biases that occur outside of people’s awareness and influences the decisions people make. There are many important decisions leading up to a suicide attempt, and it is likely that these same biases exist within suicide-related decisions. This article presents an argument for the likely existence of cognitive biases within suicide-related decision making and how they may influence people to make irrational decisions. In addition, this article provides new evidence for using a behavioral economic intervention—nudges—as a potential way to combat rising suicide rates. We explore how nudges can help increase means safety, disseminate suicide prevention skills/materials, diminish well-known biases (e.g., confirmation bias), and uncover biases that may be occurring when making suicide-related decisions.

A New Model of Man in Economics

2011 ◽  
pp. 78-98
Author(s):  
M. Storchevoy
Keyword(s):  
Behavioral Economics ◽  
Human Behavior ◽  
Social Factors ◽  
Rational Behavior ◽  
New Model ◽  
Common Framework

The paper draws on the most recent research in the field of behavioral economics, neuroscience, and other disciplines and shows how biological and social factors interact and co-determine real human behavior. The author considers in detail various affects and forms of non-rational behavior. He proposes a common framework for such analysis, where each of those forms of behavior becomes the result of conscious or evolutionary-driven choice.

Cognitive biases and limitations

2018 ◽  
Author(s):  
Marc J. Stern
Keyword(s):  
Human Behavior ◽  
Cognitive Biases ◽  
Basic Assumptions ◽  
Human Thinking

This chapter summarizes some of the most common cognitive biases and limitations in human thinking and provides specific strategies for what we can do about them in various contexts. It serves as a baseline for understanding the flaws in some of our basic assumptions about human behavior and for approaching the rest of the theories discussed in the book with an appropriate dose of humility.

scholarly journals Human–Animal Relations in Business and Society: Advancing the Feminist Interpretation of Stakeholder Theory

2021 ◽  
Author(s):  
Linda Tallberg ◽  
José-Carlos García-Rosell ◽  
Minni Haanpää
Keyword(s):  
Stakeholder Theory ◽  
Business And Society ◽  
Feminist Interpretation ◽  
Nonhuman Animals ◽  
Human Animal ◽  
Care Relationships ◽  
Human Actors ◽  
The Impact ◽  
Animal Care ◽  
Scholarly Attention

AbstractStakeholder theory has largely been anthropocentric in its focus on human actors and interests, failing to recognise the impact of nonhumans in business and organisations. This leads to an incomplete understanding of organisational contexts that include key relationships with nonhuman animals. In addition, the limited scholarly attention paid to nonhumans as stakeholders has mostly been conceptual to date. Therefore, we develop a stakeholder theory with animals illustrated through two ethnographic case studies: an animal shelter and Nordic husky businesses. We focus our feminist reading of Driscoll and Starik’s (J Bus Ethics 49:55–73, 2004) stakeholder attributes for nonhumans and extend this to include affective salience built on embodied affectivity and knowledge, memories, action and care. Findings reveal that nonhuman animals are important actors in practice, affecting organisational operations through human–animal care relationships. In addition to confirming animals are stakeholders, we further contribute to stakeholder theory by offering ways to better listen to nontraditional actors.

The economics of cognitive effort

2013 ◽  
Vol 36 (6) ◽  
pp. 704-705 ◽  
Author(s):  
John Andrew Westbrook ◽  
Todd S. Braver
Keyword(s):  
Behavioral Economics ◽  
Economic Value ◽  
Cognitive Effort ◽  
Opportunity Costs ◽  
Behavioral Economic ◽  
Cost Factors

AbstractIf cognitive effort indexes opportunity costs, it should be investigated like other cost factors including risk and delay. We discuss recent methodological advances in behavioral economics and neuroeconomics, highlighting our own work in measuring the subjective (economic) value of cognitive effort. We discuss the implications of Kurzban et al.'s proposal and how some of its predictions may be untestable without behavioral economic formalisms.

scholarly journals Shortcomings of experimental economics to study human behavior: a reanalysis of Cohn et al. 2014, Nature 516, 86–89, ‘‘Business culture and dishonesty in the banking industry’’

2018 ◽  
Author(s):  
Jean-Michel Hupé
Keyword(s):  
Behavioral Economics ◽  
Human Behavior ◽  
Business Culture ◽  
Evidence Based ◽  
Modeling And Simulations ◽  
Multiple Selves ◽  
Data Set ◽  
Financial Scandals ◽  
Bank Employees ◽  
Main Message

In the wake of financial scandals, Cohn and collaborators published a headline-grabber study in the field of behavioral economics. M.C. Villeval (2014) summarized the main message as follows, in News and Views of the Nature issue where the Cohn study was published: the “experiment shows that although bank employees behave honestly on average, their dishonesty increases when they make decisions after having been primed to think about their professional identity.” Cohn et al. thus provide evidence that “the incentives and the business culture developed in the financial sector may undermine the honesty norms of ordinary employees.” This study may have important consequences for policy, since, Villeval continues, “it is crucial to ensure a business culture of honesty in this industry to restore trust in it.” Villeval also argues that “from a scientific perspective, this study […] supports the economic theory of social identity […], links this theory with the economic analysis of lying behavior [… and] shows how behavioural economists can contribute to a broader reflection in science about how people manage their 'multiple selves' ”. Here I show that the use of flawed statistics methods, yet employed routinely in so-called “evidence-based” science, led the authors to distort the “evidence”. I am also using this data-set as an interesting example to explore how we can use modeling and simulations to provide a fair account of the information and uncertainty conveyed by the data, based on Confidence Intervals. I provide the R-code. Based on this paper, I question the contribution of behavioral economics to the understanding of human behavior and conclude with considerations on honesty and science.

Migration Processes in the Context of Behavioral Economics Theories

2021 ◽  
Vol 1 (4) ◽  
pp. 20-32
Author(s):  
Anastasia Sokolova ◽  
Olga Kalachikova
Keyword(s):  
Game Theory ◽  
Behavioral Economics ◽  
Evolutionary Game Theory ◽  
Scientific Community ◽  
Cognitive Biases ◽  
Empirical Studies ◽  
Evolutionary Game ◽  
Cognitive Distortion ◽  
Migration Behavior ◽  
And Migration

The aim of this article is to investigate the connection between behavioral economy and migration processes. Behavioral economics is a relatively new phenomenon in science and the fact that some research in this area has earned the Nobel Prize makes its contribution significant in the consideration of economic processes. The analysis of sources shows that in the field of Russian studies there is practically no mention of the fact that migration behavior can be explained by the behavioral economics theses. In this article, we explore several key ideas in this area: nudge theory, prospect theory, evolutionary game theory, cognitive distortion, and hedonistic adaptation. In this article, we put forward a hypothesis that migration processes can not only be explained from the standpoint of behavioral economics but can also be regulated using the tools of this direction. Behavioral economics can be the key for discovering the dynamics and true motives of migration. The analysis of information in this area shows, that a person makes decisions mainly based not on the laws of logic and rationalism. Paradoxes such as cognitive biases, etc. reduce the effectiveness of an individual's actions and provide an incentive for the scientific community to expand the number of empirical studies of migration processes within the framework of behavioral economics theories.

Cognitive Biases in Decision Making in Post-Bureaucratic Organizations

2017 ◽  
pp. 358-382
Author(s):  
Marie-Therese Claes ◽  
Thibault Jacquemin
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Cognitive Biases ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Decision Making Process ◽  
Rational Decision ◽  
Bureaucratic Organization ◽  
System 2 ◽  
System 1

In today's post-bureaucratic organization, where decision-making is decentralized, most managers are confronted with highly complex situations where time-constraint and availability of information makes the decision-making process essential. Studies show that a great amount of decisions are not taken after a rational decision-making process but rather rely on instinct, emotion or quickly processed information. After briefly describing the journey of thoughts from Rational Choice Theory to the emergence of Behavioral Economics, this chapter will elaborate on the mechanisms that are at play in decision-making in an attempt to understand the root causes of cognitive biases, using the theory of Kahneman's (2011) System 1 and System 2. It will discuss the linkage between the complexity of decision-making and post-bureaucratic organization.

scholarly journals The Value of Behavioral Economics for EU Judicial Decision-Making

2020 ◽  
Vol 21 (2) ◽  
pp. 240-264
Author(s):  
Christoph K. Winter
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Hindsight Bias ◽  
Judicial Decision ◽  
Behavioral Economic ◽  
Judicial Decision Making ◽  
Fundamental Freedoms ◽  
Cognitive Illusions ◽  
Proportionality Test ◽  
The Impact

AbstractThis Article analyzes the value of behavioral economics for EU judicial decision-making. The first part introduces the foundations of behavioral economics by focusing on cognitive illusions, prospect theory, and the underlying distinction between different processes of thought. The second part examines the influence of selected biases and heuristics, namely the anchoring effect, availability bias, zero-risk bias, and hindsight bias on diverse legal issues in EU law including, among others, the scope of the fundamental freedoms, the proportionality test as well as the roles of the Advocate General and Reporting Judge. The Article outlines how behavioral economic findings can be taken into account to improve judicial decision-making. Accordingly, the adaptation of judicial training concerning cognitive illusions, the establishment of a de minimis rule regarding the scope of the fundamental freedoms, and the use of economic models when determining the impact of certain measures on fundamental freedoms is suggested. Finally, an “unbiased jury” concentrating exclusively on specific factual issues such as causal connections within the proportionality test is necessary, if the hindsight bias is to be avoided. While it is of great importance to take behavioral economic findings into account, judicial decision-making is unlikely to become flawless based on natural intelligence. Despite bearing fundamental risks, artificial intelligence may provide means to achieve greater fairness, consistency, and legal certainty in the future.

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