Rationality Gone Awry? : Decision Making Inconsistent with Economic and Financial Theory
Hugh SchwartzISBN: 027597104X;
Traditional economic and financial theory is being challenged because normative, prescriptive models derived from it are not predicting the behavior of successful producers, investors, or consumers as well as anticipated. Economists and psychologists aredocumenting anomalies at the individual level, in financial markets, and in natural economic settings. This opens the larger question of the importance of psychological, sociological, and other phenomena for financial and economic behavior. It even raises the issue of what economic rationality really is. This book surveys and examines the increasing evidence of economic anomalies. It argues for an eventual, comprehensive behavioral framework for economics and finance, but in the interim, indicates how the tendency to use "rules of thumb" might be taken into account to improve predictions about decision making.
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