Bounded rationality:psychology, economics and the financial crises

Daniele Schiliro'

MPRA Paper from University Library of Munich, Germany

Abstract: This contribution focuses on the concept of bounded rationality, highlighting the role of psychology in the economic decisions. The work analyzes Simon’s approach and his notion of bounded rationality as procedural rationality. Moreover, it examines some major contributions of behavioral economics concerning cognitive biases, stressing the importance of the institutional structure in the decision process. The paper also survey the literature of behavioral finance which has become fashionable in explaining the anomalies of financial markets, pointing out also its limits.

Keywords: bounded rationality; rational choice; behavioral economics; behavioral finance; risk aversion (search for similar items in EconPapers)
JEL-codes: B52 C60 D81 D83 (search for similar items in EconPapers)
Date: 2013, Revised 2013
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Citations: View citations in EconPapers (1)

Published in Theoretical and Practical Research in Economic Fields 1.4(2013): pp. 97-108

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Related works:
Journal Article: BOUNDED RATIONALITY: PSYCHOLOGY, ECONOMICS AND THE FINANCIAL CRISES (2013)
Working Paper: Bounded rationality: psychology, economics and the financial crisis (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83721

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