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Behavioral economics, power, rational inefficiencies, fuzzy sets, and public policy.
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Journal of Economic Issues
- Article date:
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September 1, 2005
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Copyright informationCOPYRIGHT 2005 Association for Evolutionary Economics. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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A fundamental difference between mainstream or traditional neoclassical theory and the various variants of behavioral economics is that to behavioral economics assumptions matter substantively to the construction of economic models (Altman 1999, 2001d, 2003; Simon 1987a, 1987b). In addition, behavioral economics explicitly recognizes the importance of institutional parameters in model building since institutions affect the decision-making process. Moreover, the Herbert Simon tradition in behavioral economics maintains that intelligent behavior need not yield the type of optimal or efficient behaviors predicted by traditional neoclassical theory (March 1978; Simon 1987b, 1991). ...
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