Complexity Digest 2003.25 - 01.01

23-Jun-2003

Psychology And Economics: Strategizing In The Brain, Science Bookmark and Share

Excerpts: Most economic theories minimize the influence of human emotions and assume that what people believe and choose follows rationality principles. Important principles include knowing how much of one valuable good is worth one unit of another; following the rules of probability in processing information; planning ahead; resisting temptation; and guessing accurately what others will do. (...) An emerging field of study called "behavioral economics" takes advantage of dramatic advances in psychology and neuroscience. Behavioral economics replaces strong rationality assumptions with more realistic ones and explores their implications