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Traditional game theory is a critical principle of economic theory, and assumes that people's strategic decisions are shaped by rationality, selfishness and utility maximisation. [7] It focuses on the mathematical structure of equilibria, and tends to use basic rational choice theory and utility maximization as the primary principles within ...
These developments spurred economists to reconsider how psychology could be applied to economic models and theories. [9] Concurrently, the Expected utility hypothesis and discounted utility models began to gain acceptance. In challenging the accuracy of generic utility, these concepts established a practice foundational in behavioral economics ...
In their editorial essay Powell et al. outline three reasons why there is a need for a concerted research effort in behavioral strategy, namely that strategy has been too slow to incorporate relevant results from psychology, lacks adequate psychological grounding (e.g., heterogeneity is assumed and not explained in terms of reasoning and ...
A prototypical paper on game theory in economics begins by presenting a game that is an abstraction of a particular economic situation. One or more solution concepts are chosen, and the author demonstrates which strategy sets in the presented game are equilibria of the appropriate type.
Daniel Kahneman, who won the 2002 Nobel Memorial Prize in Economics for his work developing prospect theory. Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1] The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in ...
It is disputed whether "nudge theory" is a recent novel development in behavioral economics or merely a new term for one of many methods for influencing behavior. [ 1 ] [ 7 ] There have been some controversies regarding effectiveness of nudges.
The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion ...
Human development theory is a theory which uses ideas from different origins, such as ecology, sustainable development, feminism and welfare economics. It wants to avoid normative politics and is focused on how social capital and instructional capital can be deployed to optimize the overall value of human capital in an economy.