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Maps of Bounded Rationality: Psychology for Behavioral Economics †

Maps of Bounded Rationality: Psychology for Behavioral Economics † By DANIEL KAHNEMAN* The work cited by the Nobel committee was done jointly with Amos Tversky (1937–1996) during a long and unusually close collaboration. Together, we explored the psychology intuitive beliefs and choices and examined their bounded rationality. Herbert A. Simon (1955, 1979) had proposed much earlier that decision makers should be viewed as boundedly rational, and had fered a model in which utility maximization was replaced by satisficing. Our research attempted to obtain a map bounded rationality, by exploring the systematic biases that separate the beliefs that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent models. The rational-agent model was our starting point and the main source our null hypotheses, but Tversky and I viewed our research primarily as a contribution to psychology, with a possible contribution to economics as a secondary benefit. We were drawn into the interdisciplinary conversation by economists who hoped that psychology could be a useful source assumptions for economic theorizing, and indirectly a source hypotheses for economic research (Richard H. Thaler, 1980, 1991, 1992). These hopes have been realized to some extent, giving rise to an active program research by behavioral economists (Thaler, 2000; http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Maps of Bounded Rationality: Psychology for Behavioral Economics †

Kahneman, Daniel
American Economic Review , Volume 93 (5) – Dec 1, 2003
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References (163)

Publisher
American Economic Association
Copyright
Copyright © 2003 by the American Economic Association
Subject
Articles
ISSN
0002-8282
DOI
10.1257/000282803322655392
Publisher site
See Article on Publisher Site

Abstract

By DANIEL KAHNEMAN* The work cited by the Nobel committee was done jointly with Amos Tversky (1937–1996) during a long and unusually close collaboration. Together, we explored the psychology intuitive beliefs and choices and examined their bounded rationality. Herbert A. Simon (1955, 1979) had proposed much earlier that decision makers should be viewed as boundedly rational, and had fered a model in which utility maximization was replaced by satisficing. Our research attempted to obtain a map bounded rationality, by exploring the systematic biases that separate the beliefs that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent models. The rational-agent model was our starting point and the main source our null hypotheses, but Tversky and I viewed our research primarily as a contribution to psychology, with a possible contribution to economics as a secondary benefit. We were drawn into the interdisciplinary conversation by economists who hoped that psychology could be a useful source assumptions for economic theorizing, and indirectly a source hypotheses for economic research (Richard H. Thaler, 1980, 1991, 1992). These hopes have been realized to some extent, giving rise to an active program research by behavioral economists (Thaler, 2000;

Journal

American Economic Review – American Economic Association

Published: Dec 1, 2003

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