A criticism of the paradigm of rational choice in uncertain conditions through the lens of behavioral economics

2115 ◽  
Author(s):  
Jaroslav Dachel ◽  
Eva Duchácková ◽  
Jarmila Radová
Keyword(s):  
Behavioral Economics ◽  
Rational Choice

scholarly journals Rational Choice, Behavioral Economics, and the Law

1998 ◽  
Vol 50 (5) ◽  
pp. 1551 ◽  
Author(s):  
Richard A. Posner
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
The Law

Two interpretations of the rational choice theory and the relevance of behavioral critique

2019 ◽  
Vol 31 (4) ◽  
pp. 464-489 ◽  
Author(s):  
Marek Hudik
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Utility Maximization ◽  
Decision Procedure ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Human Populations ◽  
Aggregate Level ◽  
Price Theory ◽  
Jel Codes

I compare two interpretations of the rational choice theory: decision-theoretic and price-theoretic. The former takes the assumption of utility maximization as a literal description of a decision procedure. The latter considers it as a modeling device used to explain changes/variability of behavior on an aggregate level. According to the price-theoretic interpretation, these changes/variability are explained by constraints (“prices”) rather than differences in intrinsic characteristics between human populations (“tastes”). While the decision-theoretic interpretation of rationality represents a possible foundation of the price-theoretic interpretation of rationality, I argue that it is not its only possible foundation. I then show that critiques raised by behavioral economics apply to the decision-theoretic interpretation and much less so to the price-theoretic one. From the perspective of the price theory, behavioral and rational choice models are predominantly complementary. Price-theoretic interpretation helps to explain why the rational choice theory continues to play an important role in economics, even after the behavioral revolution. JEL codes: D01, D03, B41, A10

The Limits of Behavioral Economics in Tort Law

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Daniel Pi
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Tort Law ◽  
Decision Makers ◽  
Punitive Damages ◽  
The Law ◽  
Substantive Law

Abstract Skeptics of rational choice theory have long predicted that behavioral economics would radically transform the legislation, adjudication, and analysis of law. Using tort law as an exemplar, this Article maps out the narrow set of conditions where substantive law can be modified to accommodate irrational decision-makers. Specifically, this Article demonstrates that if injurers are systematically biased, and the due care standard can be expressed quantitatively, and victims are unable to take meaningful precautions, then imposing punitive damages can induce irrational injurers to exercise efficient precautionary care. In all other cases, it is better that the law adopt a presumption of rationality, regardless whether individuals behave rationally in fact.

The Micro-Foundations of International Relations Theory: Psychology and Behavioral Economics

2017 ◽  
Vol 71 (S1) ◽  
pp. S249-S263 ◽  
Author(s):  
Janice Gross Stein
Keyword(s):  
International Relations ◽  
Behavioral Economics ◽  
Rational Choice ◽  
Decision Makers ◽  
Future Research ◽  
Special Issue ◽  
New Methods ◽  
Psychological Theories ◽  
Patterns Of Behavior ◽  
Micro Foundations

AbstractAlmost forty years ago, a small group of scholars drew on cognitive psychology to explain anomalous patterns of behavior by leaders on issues of international security. Although it made significant contributions to theory and research, that scholarship did not diffuse broadly into the field. Drawing on concepts in psychology and behavioral economics, research that uses new methods is now producing a wave of scholarship in international relations exemplified by the work in this special issue. Analysis of the use of prospect theory over the last three decades identifies the scope conditions that enable the predictions of rational choice and psychological theories. These scope conditions motivate the focus on the heterogeneity of decision makers that is at the core of current contributions. Future research will move beyond the now-sterile debate between rational choice and psychology.

scholarly journals Normative rational choice theory: Past, present, and future

2015 ◽  
Vol 58 (2) ◽  
pp. 49-64 ◽  
Author(s):  
Bojan Krstic ◽  
Milos Krstic
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Utility Theory ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Expected Utility Theory ◽  
Normative Theory ◽  
Economic Literature ◽  
Economic Psychology ◽  
The Third

In this paper, we have tried to explain the normative turn in more recent work on experimental economics and behavioral economics. In section two, we discussed the various arguments that philosophers have offered in related to a normative interpretation of rational choice theory. We used the Friedman-Savage work on Expected Utility Theory as an example of the differences between the way that economists and philosophers see rational choice theory. We concluded that economists have traditionally equated the normative with ethically. In the third part, we examined the results of experimental and behaviorial economic literature with emphasis on the influence of experimental psychology. We presented a number of empirical anomalies and we agreed that representatives of economic psychology tend to view rational choice theory as a normative theory of rationality. In the last part, we examined some of the causes and consequences of the normative turn.

Behavioral Contract Law

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Thomas S. Ulen
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Contract Law ◽  
Theory Analysis ◽  
Contract Formation

Abstract This article explores some behavioral findings that are relevant to three areas of contract: formation, performance, and remedies. I compare the rational choice theory analysis of various aspects of contract law with how behavioral findings lead to a change in our understanding of that area of law. A penultimate section considers several criticisms of behavioral economics. A concluding section calls for altering some settled understandings of contract law to accommodate behavioral results and for further research about some still uncertain aspects of contracting.

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