Archivio per febbraio 2012

29
Feb
12

The Problems with Heuristics for Law by Russell Korobkin :: SSRN

Via Scoop.itBounded Rationality and Beyond

The essay analyzes the decision process in economics and its relationship with the concept of rationality starting from the theory of rational choice, that is, a systemic approach based on the formal axiomatic method applied mainly in the microeconomic field, which has become the heart of neoclassical economics. The work also focuses on the important contribution of the cognitive economics to the concept of rationality and, consequently, of criticism that this theoretical approach moves to the standard economic theory in the definition of choices, indicating a systematic discrepancy between theory and empirical evidence. Moreover, the analysis puts forward the topic of rational expectations, as the rationality of expectations concerns the preferences, and also because the hypothesis of rational expectations has characterized the development of modern macroeconomics and influenced the issue of the efficient use of information by the economic agents. This work wants to highlight, using a very little formal language, the complexity of the choice process and the unsolved relationship between economic and psychological dimensions of such a process, but at the same time it wants to argue that the economic theory as a whole is far away today from an abstract conception perfectly rational and fully informed individuals which choose without making mistakes.
Via papers.ssrn.com

29
Feb
12

Heuristics and the Law – The MIT Press

Via Scoop.itBounded Rationality and Beyond

In recent decades, the economists’ concept of rational choice has dominated legal reasoning. And yet, in practical terms, neither the lawbreakers the law addresses nor officers of the law behave as the hyperrational beings postulated by rational choice. Critics of rational choice and believers in “fast and frugal heuristics” propose another approach: using certain formulations or general principles (heuristics) to help navigate in an environment that is not a well-ordered setting with an occasional disturbance, as described in the language of rational choice, but instead is fundamentally uncertain or characterized by an unmanageable degree of complexity. This is the intuition behind behavioral law and economics. In Heuristics and the Law, experts in law, psychology, and economics explore the conceptual and practical power of the heuristics approach in law. They discuss legal theory; modeling and predicting the problems the law purports to solve; the process of making law, in the legislature or in the courtroom; the application of existing law in the courts, particularly regarding the law of evidence; and implementation of the law and the impact of law on behavior.
Via mitpress.mit.edu

29
Feb
12

Nudge blog · Where is behavioral economics headed in the world of marketing?

Via Scoop.itBounded Rationality and Beyond

Improving Decisions About Health, Wealth, and Happiness… The Nudge blog sat down (electronically) with John Kenny, Senior Vice President of Strategic Planning in Draftfcb’s Chicago office, to explore whether behavioral economics is just a fad in marketing or a legitimate tool to help the industry perform better. Starting with the Institute of Decision Making, Draftfcb has been one of the leaders in thinking about how to incorporate the discipline of behavioral economics with the practice, and business, of modern advertising and marketing. Recently, Kenny has put together a set of video lessons that serve as a guide to using behavioral economics in their work. The interactive guide, called “Marketing to Crazy People,” can be found here
Via nudges.org

29
Feb
12

A dynamic model of interactions between conscious and unconscious – Lotz, Aileen and Gosselin, Pierre (2012)

Via Scoop.itBounded Rationality and Beyond
This paper advocates that some limits of the rational agent hypothesis result from the improper assumption that one individual should be modeled as a single rational agent. We model an individual composed of two autonomous and interacting structures, conscious and unconscious. Each agent utility form depends both on external signals and other structures’ actions. The perception of the signal depends on its recipient and its grid of interpretation. We study both the static and dynamic version of this interaction mechanism. We show that the dynamics may display instability, depending on the structures interactions’strength. However, if unconscious has a strategic advantage, greater stability is reached. By manipulating other structures’goals, the strategic agent can lead the whole system to an equilibrium closer to its own optimum. This result shows that some switch in the conscious’objective can appear. Behaviors that can’t be explained with a single utility can thus be rational if we add a rational unconscious agent. Our results justify our hypothesis of a rational interacting unconscious. It supports the widening of the notion of rationality to multi-rationnality in interaction.
Via mpra.ub.uni-muenchen.de

29
Feb
12

Numbed by numbers di Paul Slovic

Via Scoop.itBounded Rationality and Beyond

If I look at the mass I will never act. If I look at the one, I will.” This statement uttered by Mother Teresa captures a powerful and deeply unsettling insight into human nature: Most people are caring and will exert great effort to rescue “the one” whose plight comes to their attention. But these same people often become numbly indifferent to the plight of “the one” who is “one of many” in a much greater problem. It’s happening right now in regards to Darfur, where over 200,000 innocent civilians have been killed in the past four years and at least another 2.5 million have been driven from their homes. Why aren’t these horrific statistics sparking us to action? Why do good people ignore mass murder and genocide? The answer may lie in human psychology. Specifically, it is our inability to comprehend numbers and relate them to mass human tragedy that stifles our ability to act. It’s not that we are insensitive to the suffering of our fellow human beings. In fact, the opposite is true. Just look at the extraordinary efforts people expend to rescue someone in distress, such as an injured mountain climber. It’s not that we only care about victims we identify with—those of similar skin color, or those who live near us: Witness the outpouring of aid to victims of the December 2004 tsunami. Yet, despite many brief episodes of generosity and compassion, the catalogue of genocide—the Holocaust, Bosnia, Rwanda, Darfur—continues to grow. The repeated failure to respond to such atrocities raises the question of whether there is a fundamental deficiency in our humanity: a deficiency that—once identified—could be overcome
Via www.rescogitans.it

29
Feb
12

Can Science Help Solve The Economic Crisis?

Via Scoop.itBounded Rationality and Beyond

Mike Brown, Stuart Kauffman, Zoe-Vonna Palmrose and Lee Smolin- The main cause of the financial crisis is instability in the financial sector including the firms, institutions and markets which comprise it. To understand this instability, we have to begin with the legitimate primary purposes of the financial markets. One is to provide capital, as equity and debt, to the goods and services economy to allow it to thrive and grow. A second is to provide a stable repository for our collective savings. And a third is to responsibly provide appropriate credit to individuals. These legitimate functions have been hijacked by speculative behavior that was unchecked by regulatory structures. The consequences of this threaten to disrupt the productive efforts of millions of ordinary people who go to work every day to make stuff and provide services to one another. In the decades leading to this crisis, the shift in our economic thinking from the long-term view on Main Street to short-term speculation and gratification on Wall Street have not only brought us to the brink of economic collapse, but have also compromised a sufficient flow of capital to important long-term initiatives—economic sustainability, renewal of infrastructure, abatement of climate change, and development of alternative energy sources—all important to a vibrant and sustainable economy.
Via www.rescogitans.it

29
Feb
12

Can Science Help Solve The Economic Crisis?

Via Scoop.itBounded Rationality and Beyond

Mike Brown, Stuart Kauffman, Zoe-Vonna Palmrose and Lee Smolin- The main cause of the financial crisis is instability in the financial sector including the firms, institutions and markets which comprise it. To understand this instability, we have to begin with the legitimate primary purposes of the financial markets. One is to provide capital, as equity and debt, to the goods and services economy to allow it to thrive and grow. A second is to provide a stable repository for our collective savings. And a third is to responsibly provide appropriate credit to individuals. These legitimate functions have been hijacked by speculative behavior that was unchecked by regulatory structures. The consequences of this threaten to disrupt the productive efforts of millions of ordinary people who go to work every day to make stuff and provide services to one another. In the decades leading to this crisis, the shift in our economic thinking from the long-term view on Main Street to short-term speculation and gratification on Wall Street have not only brought us to the brink of economic collapse, but have also compromised a sufficient flow of capital to important long-term initiatives—economic sustainability, renewal of infrastructure, abatement of climate change, and development of alternative energy sources—all important to a vibrant and sustainable economy.
Via www.rescogitans.it




Time is real? I think not

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