Psychology, Rationality and Economic Behaviour: Challenging Standard Assumptions (International Economic Association Conference Volumes)

Economics has paid little attention to the psychology of economic behavior, leading to somewhat simplistic assumptions about human nature. The psychological aspects have typically been reduced to assumptions of standard utility theory, based on a narrow conception of rationality, often called ''substantive rationality''. However, recent work, some theoretic, some based on experimental economics or an empirical analysis of existing data, challenges these assumptions and forefronts the psychological dimensions of economic decisions. The essays in this volume provide a glimpse of this exciting and newly emerging field. Economics Has Paid Little Attention To The Psychology Of Economic Behaviour, Leading To Somewhat Simplistic Assumptions About Human Nature. The Psychological Aspects Have Typically Been Reduced To Standard Utility Theory, Based On A Narrow Conception Of Rationality And Self-interest Maximization. The Studies In This Volume, Some Focused On Analytical Models And Methodology, Others On Laboratory And Field Experiments, Challenge Standard Economic Assumptions - In Particular The Assumption Of Homo Economicus - And Provide Novel And Complex Understandings Of Human Motivation And Economic Decision-making. They Cover A Wide Range Of Aspects, Including The Role Of Self Confidence, Learning, Altruism, Inequality Aversion, Money Illusion And Notions Of Justice And Fairness In Explaining Economic Behaviour In A Variety Of Contexts - The Family, The Community And The Workplace. On The One Hand, The Contributors Provide Extensions, Developments, And New Proofs Of Psychological Ideas By Using The Tools Of Economics (game Theory, Principal-agent Theory, Inter-temporal Maximization, And So On). On The Other Hand, These Studies Have The Potential For Influencing Other Disciplines, Thus Progressively Broadening The Scope Of Inter-disciplinary Exchange. Some Even View This Ongoing Process Of Innovation In Economic Theory As A Paradigmatic Shift. With A Pioneering Introduction By The Book's Two Editors, This Volume Brings Together Exciting New Contributions To A Field That Is Rapidly Growing In Influence And Reach. Introduction / B. Agarwal And A. Vercelli -- Part 1: Analytical Models And Methodological Issues -- Self-confidence And Personal Motivation / R. Benabou And J. Tirole -- Rationality, Learning And Complexity / A. Vercelli -- Altruism: Evolution And A Repercussion / O. Stark, Y.q. Wang And Y. Wang -- Human Reproduction And Utility Functions: An Evolutionary Approach / A. Vasin -- Moral Hazard, Contracts And Social Preferences: A Survey / F. Englmaier -- Mutual Concern, Workplace Relationships And Pay Scales / O. Chillemi -- Part 2: Laboratory And Field Experiments -- Expectations And The Effects Of Money Illusion / E. Fehr And J-r. Tyran -- Utility-based Altruism: Evidence From Experiments / F. Bolle And A. Kritikos -- Equity Judgements Elicited Through Experiments: An Econometric Examination / J. Jungeilges And T. Theisen -- Groups, Commons And Regulations: Experiments With Villagers And Students In Columbia / J-c. Cardenas. Edited By Bina Agarwal And Alessandro Vercelli. Revised Versions Of Papers Presented At The Thirteenth World Congress Of The International Economic Association, Held At The Centro Cultural De Belém In Lisbon, Portugal, Sept. 9-13, 2002. Includes Bibliographical References. Cover......Page 1 Contents......Page 6 The International Economic Association......Page 8 Acknowledgements......Page 10 List of Abbreviations and Acronyms......Page 13 List of Contributors......Page 14 1 Introduction......Page 16 Part I Analytical Models and Methodological Issues......Page 32 2 Self-Confidence and Personal Motivation......Page 34 3 Rationality, Learning and Complexity......Page 73 4 Altruism: Evolution and a Repercussion......Page 99 5 Human Reproduction and Utility Functions: An Evolutionary Approach......Page 121 6 Moral Hazard, Contracts and Social Preferences: A Survey......Page 140 7 Mutual Concern, Workplace Relationships and Pay Scales......Page 155 Part II Laboratory and Field Experiments......Page 168 8 Expectations and the Effects of Money Illusion......Page 170 9 Utility-Based Altruism: Evidence from Experiments......Page 196 10 Equity Judgements Elicited Through Experiments: An Econometric Examination......Page 210 11 Groups, Commons and Regulations: Experiments with Villagers and Students in Colombia......Page 257 Economics has paid little attention to the psychology of economic behaviour, leading to somewhat simplistic assumptions about human nature. The psychological aspects have typically been reduced to standard utility theory, based on a narrow conception of rationality and self-interest maximization. The contributions in this volume, some focused on analytical models and methodology, others on laboratory and field experiments, challenge these assumptions, and provide novel and complex understandings of human motivation and economic decision-making. With a pioneering introduction by the book's two editors, this volume brings together exciting contributions to a field that is rapidly growing in influence and reach.