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Social and Behavioral Sciences Commons™
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Full-Text Articles in Social and Behavioral Sciences
Economics Of Reciprocity And Temptation, Laxman Bokati, Olga Kosheleva, Vladik Kreinovich, Nguyen Ngoc Thach
Economics Of Reciprocity And Temptation, Laxman Bokati, Olga Kosheleva, Vladik Kreinovich, Nguyen Ngoc Thach
Departmental Technical Reports (CS)
Behavioral economics has shown that in many situations, people's behavior differs from what is predicted by simple traditional utility-maximization economic models. It is therefore desirable to be able to accurately describe people's actual behavior. In some cases, the difference from the traditional models is caused by bounded rationality -- our limited ability to process information and to come up with a truly optimal solutions. In such cases, predicting people's behavior is difficult. In other cases, however, people actually optimize -- but the actual expression for utility is more complicated than in the traditional models. In such case, it is, in …
Predictably (Boundedly) Rational: Examples Of Seemingly Irrational Behavior Can Be Quantitatively Explained By Bounded Rationality, Laxman Bokati, Olga Kosheleva, Vladik Kreinovich
Predictably (Boundedly) Rational: Examples Of Seemingly Irrational Behavior Can Be Quantitatively Explained By Bounded Rationality, Laxman Bokati, Olga Kosheleva, Vladik Kreinovich
Departmental Technical Reports (CS)
Traditional economics is based on the simplifying assumption that people behave perfectly rationally, that before making any decision, a person thoroughly analyzes all possible situations. In reality, we often do not have enough time to thoroughly analyze all the available information, as a result of which we make decisions of bounded rationality -- bounded by our inability to perform a thorough analysis of the situation. So, to predict human behavior, it is desirable to study how people actually make decisions. The corresponding area of economics is known as behavioral economics. It is known that many examples of seemingly irrational behavior …