This paper is an attempt to broaden the standard economic discourse by importing insights into human behavior not just from psychology, but also from sociology and anthropology. Whereas the concept of the decision-maker in standard economics is the rational actor, and in early work in behavioral economics it is the quasi-rational actor, in some of the recent work in behavioral economics it coul...

The policy recommendations of most economists are based, explicitly or implicitly, on the rational actor model of human behavior. Behavior is assumed to be self-regarding, preferences are assumed to be stable, and decisions are assumed to be unaffected by social context or frame of reference. The related fields of behavioral economics, game theory, and neuroscience have confirmed that human beh...

This paper offers a model for the bias found in willingness-to-pay valuations against new treatments. For example, this bias provides an explanation for patient preferences that make it difficult for formularies to take treatments off their lists, even when newer treatments would appear to be clearly preferable. The appeal of the model, which is based on imperfect information, is that it is con...

Much research on judgment and decision making has focussed on the adequacy of classical rationality as a description of human reasoning. But more recently it has been argued that classical rationality should also be rejected even as normative standards for human reasoning. For example, Gigerenzer and Goldstein (1996) and Gigerenzer and Todd (1999a) argue that reasoning involves ‘‘fast and fruga...

A model of time-consistent procrastination is developed to assess the extent to which the observed behavior is compatible with rational behavior. When a finite work requirement must be completed by a deadline, the remaining time for leisure is an exhaustible resource. With a positive rate of time preference, the optimal allocation of this resource results in more hours spent working (and fewer ...

MEDICAL DECISION MAKING is a gamble in which the patient is at risk and the physician is accountable. It is analyzed here as a formal mathematical problem in risk optimization. One solution is the BAYES DECISION RULE which minimizes personal risk and defines the decision logic of a rational patient according to EXPECTED UTILITY THEORY. A second solution is the MINIMAX DECISION RULE which minimi...

This letter suggests, and describes through an example, a dominance approach to rational expectations as an alternative to the perfect foresight fixed point for closing a model. Dominance criteria have a long history in game theory [see, e.g., Harsanyi (1977, p. 107)]. It also has long been recognized that dominance is not a universally applicable model of behavior [see e.g., Harsanyi (1977, p....