Psychology and Economics
Because psychology systematically explores human judgment, behavior, and well-being, it can teach us important lessons about how humans differ from the way they are traditionally described by economists. This essay discusses a selection of psychological findings relevant to economics. While standard economics assumes that each person maximizes stable and coherent preferences given rationally-formed probabilistic beliefs, psychological research teaches us about ways to describe preferences more realistically, about biases in belief-formation, and about ways it is misleading to conceptualize people as attempting to maximize stable, coherent, and accurately perceived preferences.
Year of publication: |
1998
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Authors: | Rabin, Matthew |
Published in: |
Journal of Economic Literature. - American Economic Association - AEA. - Vol. 36.1998, 1, p. 11-46
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Publisher: |
American Economic Association - AEA |
Saved in:
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