Rethinking Behavioral Economics Through Fast And Frugal Heuristics
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| Author | : Shabnam Mousavi |
| Publisher | : |
| Total Pages | : 24 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
The goal of behavioral economics is to develop models that extend the explanatory and predictive power of economic theory, to address violations of expected utility theory, and to account more realistically for individual choice behavior that does not adhere to calculative rationality. In mainstream behavioral economics, two defining practices have been to list so-called cognitive fallacies and to extend existing expected utility models by adding parameters to account for behavioral factors. Both practices have met their limits. Many cognitive fallacies have been shown to be most likely error on the part of researchers, and adding parameters has been shown to improve fitting but not necessarily the predictive power of the revised utility model. In view of this situation, we review fast-and-frugal heuristics as an alternative vision of behavioral economics that leads to testable process models with superior predictive power. Such a theory satisfies Herbert Simon's criteria of developing process models rather than as-if Bernoulli functions, deals with genuine uncertainty rather than reducing uncertainty to calculable risk, and postulates ecological rather than logical rationality.
| Author | : Shabnam Mousavi |
| Publisher | : Palgrave Macmillan |
| Total Pages | : 240 |
| Release | : |
| Genre | : Business & Economics |
| ISBN | : 9781137570789 |
We all want more information in order to make better decisions and calculate risk, but oftentimes that information is scarce. This new strategy, based on extensive cognitive and economic research, shows how to make financial decisions through a 'fast and frugal' method.
| Author | : William P. Forbes |
| Publisher | : Academic Press |
| Total Pages | : 276 |
| Release | : 2019-06-15 |
| Genre | : Business & Economics |
| ISBN | : 0128124954 |
A Fast and Frugal Finance: Bridging Contemporary Behavioral Finance and Ecological Rationality adds psychological reality to classical financial reasoning. It shows how financial professionals can reach better and quicker decisions using the 'fast and frugal' framework for decision-making, adding dramatically to time and outcome efficiency, while also retaining accuracy. The book provides the reader with an adaptive toolbox of heuristic tools and classification systems to aid real-world decisions. Throughout, financial applications are presented alongside real-world examples to help readers solve established problems in finance, including stock buying and selling decisions, even in situations of considerable uncertainty and risk. The book concludes by describing potential solutions to financial problems, including discussions on high frequency trading and machine learning algorithms. Demonstrates how well-constructed 'fast and frugal' models can outperform standard models in time and outcome efficiency Focuses on how financial decisions are made in reality rather than how they should be made Discusses how cognition and the decision-making context interact in producing 'fast and frugal' choices Explores the development of decision-making trees in finance to aid in decision-making
| Author | : Morris Altman |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 607 |
| Release | : 2017-05-26 |
| Genre | : Business & Economics |
| ISBN | : 1782549595 |
This Handbook is a unique and original contribution of over thirty chapters on behavioural economics, examining and addressing an important stream of research where the starting assumption is that decision-makers are for the most part relatively smart or rational. This particular approach is in contrast to a theme running through much contemporary work where individuals’ behaviour is deemed irrational, biased, and error-prone, often due to how people are hardwired. In the smart people approach, where errors or biases occur and when social dilemmas arise, more often than not, improving the decision-making environment can repair these problems without hijacking or manipulating the preferences of decision-makers. This book covers a wide-range of themes from micro to macro, including various sub-disciplines within economics such as economic psychology, heuristics, fast and slow-thinking, neuroeconomics, experiments, the capabilities approach, institutional economics, methodology, nudging, ethics, and public policy.
| Author | : Peter Earl |
| Publisher | : Cambridge University Press |
| Total Pages | : 541 |
| Release | : 2022-07-28 |
| Genre | : Business & Economics |
| ISBN | : 1316515095 |
Presents the ONE behavioral approach to economics: a grand synthesis of Old, New and Evolutionary behavioral approaches.
| Author | : Shabnam Mousavi |
| Publisher | : |
| Total Pages | : 27 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Behavioral economists use psychological findings to evaluate and revise economic decision theory, to build models that correspond directly to observations of behavior, and to develop descriptive accounts for deviations from principles of neoclassical rationality. One of the main sources of psychological insight is the heuristics and biases research program. This chapter introduces another source of psychological insights, the ecological rationality of fast-and-frugal heuristics, and is organized as follows. First, the chapter juxtaposes psychological (á la Gigerenzer) with economic (á la Smith) views of ecological rationality, thereby connecting fast-and-frugal heuristics to a major source of inspiration and motivation for behavioral economists, namely experimental economics. Then, it briefly reviews a collection of articles illustrating how the successful use of heuristics in business decision making can be understood by using ecological rationality as an investigative framework. Finally, it locates the field of inquiry for behavioral economics on a continuum of scientific problem solving in the interval that Weaver (1948) called organized complexity. Simple heuristics deserve special attention from behavioral economists because they work best in this very interval where exact methods of optimization are structurally unfitting. Put together, these connections, examples, and arguments suggest that mainstream behavioral economics can gain from integrating this less-explored psychological framework. This integration starts by attempting to formulate effective decision rules as fast-and-frugal heuristics and exploring their ecological rationality.
| Author | : Julia Puaschunder |
| Publisher | : Springer Nature |
| Total Pages | : 183 |
| Release | : 2020-10-19 |
| Genre | : Business & Economics |
| ISBN | : 3030543307 |
This book explores human decision-making heuristics and studies how nudging and winking can help citizens to make rational choices. By applying the behavioral economics approach to political outcomes, it demonstrates how economics can be employed for the greater societal good. It starts with a review of the current literature on human decision-making failures in Europe and North America, presenting the wide range of nudges and winks developed to curb the harmful consequences of human decision-making fallibility. It then discusses the use of mental heuristics, biases and nudges in the finance domain to benefit economic markets by providing clear communication strategies. Lastly, the author proposes clear leadership and followership directives on nudging in the digital age. This book appeals to scholars and policy makers interested in rational decision-making and the use of nudging and winking in the digital age.
| Author | : Henry Priest |
| Publisher | : |
| Total Pages | : 126 |
| Release | : 2019-11-27 |
| Genre | : |
| ISBN | : 9781712275160 |
Powerful Cognitive Biases Impair Our Economic Decisions - Do you know that human beings have mental blind spots which prevent them from being rational at all times?- Do you know that being more intelligent is not necessarily being more rational?- Do you know that the recent financial crisis which straddled across the globe brought down some of the oldest and most venerated financial institutions in the world?- Do you think your economic decisions are always optimal? If your answer to any of the above questions is 'No', then you need this book!Discover How Behavioral Economics Can Improve Economic Analysis Behavioural economics is about bringing reality into economic analysis by factoring in human behaviour. It borrows from psychology, sociology, politics, and institutional economics (which focuses on the rules of the economic game) to describe and explain human behaviour and economic phenomena. Behavioural economics builds upon conventional economics, offering more tools for understanding why people behave the way they do when it comes to income, wealth, ethics, and fairness. It uses prospect theory to describe the choices that the typical person makes. A Beginner's Guide to Behavioral EconomicsThis book presents the elements of Behavioral Economics and share some powerful academic research findings on cognitive biases and how they impact our judgment. In this book you will: - Understand what Behavioural Economics is about- Understand how it can improve traditional economics- Learn techniques to overcome cognitive biases Here are the answers to some questions you might have about this book: Q: What is this book about? A: This book is a beginner's guide to Behavioral Economics. The recent financial crisis was a product of economics not accounting for cognitive biases. This book explains how behavioural economics could improve traditional economics.Q: What kind of techniques will I get to learn in this book? A: In this book you will learn how to account for cognitive biases in economic analysis. Q: Do I need to have prior qualifications before I read this book? A: The only thing that is required is your keenness to learn. Some experience in the financial sector or knowledge of basic economics can make the grasping faster, but it is not a prerequisite. Every day that you delay is another day that you stagnate in your growth as a manager-leader.Take action now and buy this book by clicking the 'Buy now with 1-click' button
| Author | : Julia Puaschunder |
| Publisher | : Springer |
| Total Pages | : 0 |
| Release | : 2023-11-23 |
| Genre | : Business & Economics |
| ISBN | : 9783031157127 |
This book explores human decision-making heuristics. The monograph studies how nudging and winking can help citizens to make rational choices and governments to create choice architectures that aid in stabilizing markets and flourishing society. By applying the behavioral economics approach to political outcomes, it demonstrates how economics can be employed for personal benefits but also foster the greater societal good. A review of the current literature on human decision-making advantages and failures in Europe and North America opens the book. A wide range of nudges and winks is presented that aid to curb the harmful consequences of human decision-making fallibility. Awareness of mental heuristics and biases in the finance domain is strengthened in order to understand how to nudge people to benefit from economic markets but also help governments to stabilize economies in providing strategic market communication. The author also proposes concrete leadership and followership directives on nudging in the digital age. This book appeals to scholars and policy makers interested in rational decision-making. The behavioral perspective features the strategic use of nudging and winking in the digital age. The second revised and expanded edition offers the newest insights on behavioral e-Economics and the latest developments regarding the COVID-19 pandemic. It covers topics such as the role of social media in finance and discrimination in searchplace competition. It also offers new insights on strategic leadership and smart followership directives to successfully navigate through complex and fast-paced e-architectures.
| Author | : Roger Frantz |
| Publisher | : Routledge |
| Total Pages | : 435 |
| Release | : 2016-08-05 |
| Genre | : Business & Economics |
| ISBN | : 1317589246 |
There is no doubt that behavioral economics is becoming a dominant lens through which we think about economics. Behavioral economics is not a single school of thought but representative of a range of approaches, and uniquely, this volume presents an overview of them. The wide spectrum of international contributors each provides an exploration of a central approach, aspect or topic in behavorial economics. Taken together, the whole volume provides a comprehensive overview of the subject which considers both key developments and future possibilities. Part One presents several different approaches to behavioural economics, including George Katona, Ken Boulding, Harvey Leibenstein, Vernon Smith, Herbert Simon, Gerd Gigerenzer, Daniel Kahneman, and Richard Thaler. This section looks at the origins and development of behavioral economics and compares and contrasts the work of these scholars who have been so influential in making this area so prominent. Part Two presents applications of behavioural economics including nudging; heuristics; emotions and morality; behavioural political economy, education, and economic innovation. The Routledge Handbook of Behavioral Economics is ideal for advanced economics students and faculty who are looking for a complete state-of-the-art overview of this dynamic field.
