scholarly journals BEHAVIORAL ECONOMICS AND BEHAVIORAL FINANCE AS A NECESSARY STAGE IN THE DEVELOPMENT OF THE HOMO ECONOMICUS MODEL

2020 ◽  
Vol 1 (№9 2020) ◽  
pp. 48-57
Author(s):  
I.A. Kirsanov ◽  
L.B. Parfyonova
Keyword(s):  
Behavioral Economics ◽  
Behavioral Finance ◽  
Homo Economicus

Behavioral Decision Theory

2020 ◽  
Author(s):  
Kazuhisa Takemura
Keyword(s):  
Decision Making ◽  
Decision Theory ◽  
Behavioral Economics ◽  
Behavioral Finance ◽  
Utility Theory ◽  
Normative Theory ◽  
Behavioral Decision Theory ◽  
Behavioral Decision ◽  
Descriptive Theory ◽  
Human Decision

Behavioral decision theory is a descriptive psychological theory of human judgment, decision making, and behavior that can be applied to political science. Behavioral decision theory is closely related to behavioral economics and behavioral finance. Behavioral economics is an attempt to understand actual human economic behavior, and behavioral finance studies human behavior in financial markets. Research on people’s decision making represents an important part of these fields, in which various aspects overlap with the scope of behavioral decision theory. Behavioral decision theory focuses on the decision-making phenomena that are broadly divisible into those under certainty, those under risk, and others under uncertainty that includes ambiguity and ignorance. What are the theoretical frameworks that could be used to explain the decision-making phenomenon? Although numerous theories related to decision making have been developed, they are, in essence, often broadly divided into two types: normative theory and descriptive theory. The former is intended to support rational decision making. The latter describes how people actually make decisions. Both normative and descriptive theories reflect the nature of actual human decision making to a degree. Even descriptive theory seeks a certain level of rationality in actual human decision making. Consequently, the two are mutually indistinguishable. Nonetheless, a major example of normative theory is regarded as the system of utility theory that is widely used in economics. A salient example of descriptive theory is behavioral decision theory. Utility theory has numerous variations, such as linear and nonlinear utility theories. Most theories have established axioms and mathematically developed principles. In contrast, behavioral decision theory covers a considerably wide range of variations of theoretical expressions, including theories that have been developed mathematically (such as prospect theory) and those expressed only with natural language (such as multiattribute decision-making process models). Behavioral decision theory has integrated the implications of the normative theory, descriptive theory, and prescriptive theory that help people to make better decisions.

Neuromarketing as interdisciplinary area: Theoretical and methodological analysis

2021 ◽  
Vol 39 (6) ◽  
Author(s):  
Vitalii S. Reikin ◽  
Serhii YA. Voitovych ◽  
Tetiana I. Danyliuk ◽  
Kateryna YU. Dedeliuk ◽  
Iryna F. Lorvi
Keyword(s):  
Behavioral Economics ◽  
Experimental Studies ◽  
Necessary Condition ◽  
Methodological Principle ◽  
Consumer Decision Making ◽  
Homo Economicus ◽  
Sensory Marketing ◽  
Informational Uncertainty ◽  
Methodological Principles ◽  
Information Incompleteness

Modern neuromarketing is a synthesis of behavioral economics theoretical and methodological foundations in close connection with the tools of neurophysiology which are successfully used in the practice of sensory marketing. At the same time, the basic methodological principle of neuromarketing is limited rationality in the context of behavioral and informational uncertainty. Purpose of publication – сarrying out theoretical and methodological analysis of neuromarketing as a complex interdisciplinary and innovative area; disclosure of methodological principles and theoretical provisions of behavioral economics in the context of their applications in touch marketing. Such methods as analysis, comparison, generalization, systemic and logical ones were used in the research. It is argued that consumer decision-making in choice situations is influenced by emotions based on subconscious perception. It is proved that visual, sound and aromarketing are the main “nudging” factors of R. Thaler’s theory in the context of neuromarketing. For the first time in the scientific discourse, the elements of the sensory component of neuromarketing are considered as stimulating factors for the implicit “nudging” of R. Thaler's behavioral economics theory. The theoretical and methodological foundations of neuromarketing research, which based on more realistic postulates of limited rationality, influence of emotions and information incompleteness in contrast to “homo economicus” neoclassical paradigm are improved. It is shown that a necessary condition for further successful development of neuromarketing is a combined interaction of psychology behavioral direction, neurophysiological technologies and empirical experience of marketers due to possible achievement of synergistic effect. The results of experimental studies, based on the empirical experience of a number of well-known scientists using neurophysiological methods, have proved the verification of the basic theoretical and methodological positions and individual effects of behavioral economics, which are actively used by Ukrainian marketers and marketers of other countries.

Implications of Behavioral Economics for the SEC Fiduciary Standard and the Regulatory Protection of Pension Participants

2018 ◽  
Keyword(s):  
Economic Theory ◽  
Behavioral Economics ◽  
Behavioral Finance ◽  
Financial Literacy ◽  
Conflicts Of Interest ◽  
Public Policies ◽  
Best Interest ◽  
Nonprofessional Investors ◽  
Good Advice ◽  
Regulatory Protection

Depending on the “lens” through which they are viewed, public policies can be seen very differently, even to the point of judging them effective versus ineffective. A case in point is the SEC fiduciary standard. In this case, traditional rational economics and behavioral economics have much different implications concerning the adequacy of the level of protection provided to nonprofessional investors. Viewed through the lens of traditional rational economic theory, sophisticated, well-informed investors are well-served by the SEC fiduciary standard’s emphasis on disclosure of conflicts of interest and fees and the prevention of fraud. However, it seems far less effective in preventing problems when viewed through the lens of behavioral finance, particularly financial literacy, where many if not most investors display knowledge shortcomings and exhibit well-known behavioral biases. For example, by not establishing a definition for low or reasonable fees, the SEC fiduciary standard for good advice permits advisers to meet the standard of acting in the best interest of the client, while providing advice that would lead to the client being substantially worse off once fees are taken into account.

Are people with high psychoticism the true homo economicus?

2020 ◽  
Vol 38 (3) ◽  
Author(s):  
Rafael Manuel Lopez ◽  
José Luis Calvo ◽  
Iván Ruíz ◽  
Sergio Martín
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Homo Economicus ◽  
Final Grade ◽  
Common Fund ◽  
Knowing That ◽  
The Common ◽  
Behavioral Games ◽  
The Relationship ◽  
Web Platform

Homo Economicus behaves rationally, maximizing his own utility over that of the group. The relationship with non-prosocial behavior seems clear. This behavior, typical of people with high psychoticism, could affect their decision-making. Therefore, not only the situation will be critical when making a decision, but also stable variables related to personality. In the context of the Common Goods Game, a web platform for implementing behavioral games was developed. The system allows users to play collaborative games such as the Common Goods Game. 97 students participated in that game and contributed to a common fund. They had 25 units, corresponding to 25 tenths of one subject final grade score, which can contribute to the common fund to the extent that they wish, knowing that the total amount of the common fund will be doubled and will be distributed equally among all the participants. The results show that the subjects with the lowest levels of consciousness and agreeableness traits adopt the antisocial strategy and are the ones that obtain the most benefits. Although the limitations of the study the results suggest that both types of variables, situational and dispositional, should be taken into account when studying decision-making in behavioral economics.

A Challenge to Homo Economicus: Behavioral Economics

2020 ◽  
pp. 181-200
Author(s):  
Hatice Isıl Alkan
Keyword(s):  
Behavioral Economics ◽  
Homo Sapiens ◽  
Neoclassical Economics ◽  
Unique Equilibrium ◽  
Real Word ◽  
Mainstream Economic ◽  
Homo Economicus ◽  
Economic Man ◽  
Economic Paradigm ◽  
Current Events

Neoclassical economics is the mainstream economic paradigm of the present era and has certain assumptions such as rationality, perfect knowledge and unique equilibrium. In this regard, homo economicus, namely rational economic man is the main agent of mainstream economics. However, this main agent has aspects that are inconsistent with reality. In other words, decision units are likely to be irrational in the real word because individuals are emotional and social beings. Considering that this conception of rationality contradicts with the instability of economies and crises that have happened, it seems that the dominant economic view cannot exactly explain current events. This chapter questions the concept of homo economicus, the compatibility of homo economicus with homo sapiens and attempts to reveal the shortcomings of the dominant view. It substantially tries to explore why behavioral economics is necessary and how behavioral economics can make up for the shortcomings of the mainstream economic paradigm by the help of its branches; experimental economics and neuroeconomics.

Review on behavioral economics and behavioral finance

2020 ◽  
Vol 37 (4) ◽  
pp. 625-672
Author(s):  
Wing-Keung Wong
Keyword(s):  
Behavioral Economics ◽  
Behavioral Finance ◽  
Design Methodology ◽  
Risk Measures ◽  
Theoretical Models ◽  
Econometric Models ◽  
Simulation Studies ◽  
Content Type ◽  
Economic Decision Making ◽  
Diversification Strategies

Purpose This paper aims to give a brief review on behavioral economics and behavioral finance and discusses some of the previous research on agents' utility functions, applicable risk measures, diversification strategies and portfolio optimization. Design/methodology/approach The authors also cover related disciplines such as trading rules, contagion and various econometric aspects. Findings While scholars could first develop theoretical models in behavioral economics and behavioral finance, they subsequently may develop corresponding statistical and econometric models, this finally includes simulation studies to examine whether the estimators or statistics have good power and size. This all helps us to better understand financial and economic decision-making from a descriptive standpoint. Originality/value The research paper is original.

scholarly journals THE EVOLUTION OF HOMO ECONOMICUS

2016 ◽  
pp. 129-142
Author(s):  
N. V. Komarovskaia
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Human Behavior ◽  
Law And Economics ◽  
Interdisciplinary Approach ◽  
Economic Thought ◽  
Economic Behavior ◽  
Economic Research ◽  
Homo Economicus ◽  
Economic Decision Making

The article provides a review of the ways in which interdisciplinary research in modern economic thought gives a more realistic understanding of human behavior and economic decision making. On the one hand, economic imperialism drove wider application of economics methods across social sciences and brought about new interdisciplinary fields, such as law and economics, economic sociology, public choice theory, etc. On the other hand, the origin of behavioral economics, experimental economics, and neuroeconomics bridging psychology, neurobiology, and economics influences the change in the methodology used by the economics itself and fuels transformation of the model of rational economic behavior 'homo economicus', one of the central assumptions of the neoclassical economics. George Akerlof and Robert Shiller's animal spirits, prospect theory of Daniel Kahneman and Amos Tversky, research by Amartya Sen, Daniel McFadden, Vernon Smith, and other economists focusing on decision making either significantly limit, or supplement the homo economicus concept providing a deeper insight into the nature of human rationality. Behavioral economics has already become so strong as a separate discipline that it can be classified into two streams - Classical and Modern, and its main principles should be incorporated into a basic course of traditional economics. The achievements of behavioral economics yield higher quality of economic research and forecasting. Interdisciplinary approach to the human behavior studies and transformation of homo economicus offer new tools for the development policy making.

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