Behavioral economics attempts to explain the decision making process of individuals and furthermore challenges the commonly accepted notion that individuals act rationally. One of the fundamental notions of neoclassical economics is that people act in a rational manner when making market decisions. Behavioral economics seeks to counter this by showing the limitations of the accepted rationality of individuals. Nearly all of the findings within the behavioral economics realm have been attributed to various results from experiments and surveys. These experiments and surveys look at the the psychology of individuals and observes how they act in a given sociological context. These results are then analyzed to show a certain type of behavior or effect which leads to individuals not acting rationally with their decisions in the market, thus questioning the foundation of the rationality of individuals in the neoclassical point of view. Some of these behaviors include reciprocity, loss aversion and the notions of fairness, greed, revenge and fear. wiki.dickinson.edu/index.php/Behavioral_Economics_Criticism
Posted on: Tue, 06 Aug 2013 22:27:56 +0000
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