View from Behavioral Economics Theory: Case of Latvian Rural Entrepreneurs

Igo Cals ()
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Igo Cals: University of Latvia, Latvia

Eurasian Journal of Economics and Finance, 2013, vol. 1, issue 2, 51-54

Abstract: The theory of classical economics treats entrepreneurs as subjects who make rational economic decisions. Empirical surveys prove the fact that daily economic decisions made by a separate economic entity can be explained by concepts of behavioral economics rather than classical economics. The economic behavior of entrepreneurs happens to be based on bounded rationality instead of financial justification. The objective of an economic activity presented as economically efficient can turn out to be socially important to a specific entrepreneur and not to national economy as a whole. In the EU countries, agriculture is a subsidized industry of national economy. In this light, status consumption and purchase of positional goods should create a special interest among economists. The objective of this article is to present true reasons of economic decisions made by rural entrepreneurs and to analyze the value hierarchy of Latvian rural entrepreneurs through carrying out a field work and with the help of set of instruments developed by modern economics theory

Keywords: Behavioral Economics; Bounded Rationality; Conspicuous Consumption; Positional Goods; Rural Entrepreneurs (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ejn:ejefjr:v:1:y:2013:i:2:p:51-54

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