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Methodological challenges in Behavioural Economics: Towards a more holistic and empirically rooted economic science

Author

Listed:
  • Morris Altman

    (University of Dundee School of Business
    Professor of Behavioural and Institutional Economics, and Co-operatives)

Abstract
This paper is a methodological one that addresses some of the shortcomings with contemporary behavioural economics, pioneered by Kahneman and Tversky. The latter relates to the heuristics and biases narrative that focuses on day-to-day choice behavior and individuals persistently deviating from neoclassical computationally intensive decision-making norms. I place this approach in the context of other alternative and sometimes complimentary perspectives on behavioural economics inclusive the fast and frugal approach and Simon's bounded rationality narrative. I argue for a more holistic empirical grounded behavioural economics that is more focused on better understanding the decision-making environment and individuals' decision-making capabilities and preferences that drive real work decision-making. This approach taps into the contributions of pioneers of behavioural economics and also compliments price theory and revises but does not abandon the notion of smart or intelligent decision-makers. It also allows for better understanding how individual freedom and empowerment is critical to optimal and welfare improving decision-making. Better understanding the over-arching decision-making environment can help fill the gaps in the choice literature with important implications for economic prediction and public policy.

Suggested Citation

  • Morris Altman, 2021. "Methodological challenges in Behavioural Economics: Towards a more holistic and empirically rooted economic science," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 5(S3), pages 19-33, October.
    • Handle: RePEc:beh:jbepv1:v:5:y:2021:i:s3:p:19-33
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    behavioral economics; bounded rationality; heuristics; and biases; errors; institutional; asymmetric information; economic theory;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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