Decision, Contract and Emotion: Some Economics for a Complex and Confusing World

W. Bentley Macleod

No 336., Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This essay illustrates that if Savage's small world assumption is relaxed, one can construct a theory of bounded rationality that incorporates some of the insights from recent work in cognitive psychology. The theory can be used to explain why contracts are incomplete and the existence of endowment effects in exchange.

Keywords: Bounded rationality; decision theory; complexity (search for similar items in EconPapers)
JEL-codes: D0 J3 (search for similar items in EconPapers)
Date: 1996-01-01
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Journal Article: Decision, Contract, and Emotion: Some Economics for a Complex and Confusing World (1996)
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:336

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