Bounded Rationality, Beliefs, and Behavior

Sebastian Schweighofer-Kodritsch

No 37, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: This chapter presents a microeconomic, behavioral perspective on bounded rationality and beliefs. It begins with an account of how research on belief biases, in particular via probabilistic belief elicitation, has become mainstream in economics only relatively recently and late, even in behavioral economics (aka “psychology and economics”). The chapter then offers a review of the decision-theoretic foundations of modeling and eliciting (subjective) beliefs as probabilities, as well as selected—both classic and recent—evidence on humans’ bounded rationality from related research in psychology and economics. In doing so, it connects the historical debates within decision theory, on the one hand, and within psychology, on the other, concerning the normative status of expected utility and Bayesianism, as well as its methodological implications. A conclusion draws lessons for the practice of belief elicitation and future research.

Pages: 36 pages
Date: 2024-04-18
New Economics Papers: this item is included in nep-evo, nep-his, nep-hpe and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0037

DOI: 10.48462/opus4-5363

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