Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgments
- Introduction
- PART I RATIONALITY, MARKETS, AND INSTITUTIONS
- PART II IMPERSONAL EXCHANGE: THE EXTENDED ORDER OF THE MARKET
- 3 Relating the Two Concepts of a Rational Order
- 4 Market Institutions and Performance
- 5 Asymmetric Information and Equilibrium without Process
- 6 FCC Spectrum Auctions and Combinatorial Designs: Theory and Experiment
- 7 Psychology and Markets
- 8 What Is Rationality?
- PART III PERSONAL EXCHANGE: THE EXTERNAL ORDER OF SOCIAL EXCHANGE
- PART IV ORDER AND RATIONALITY IN METHOD AND MIND
- References
- Index
7 - Psychology and Markets
Published online by Cambridge University Press: 18 May 2010
- Frontmatter
- Contents
- Preface
- Acknowledgments
- Introduction
- PART I RATIONALITY, MARKETS, AND INSTITUTIONS
- PART II IMPERSONAL EXCHANGE: THE EXTENDED ORDER OF THE MARKET
- 3 Relating the Two Concepts of a Rational Order
- 4 Market Institutions and Performance
- 5 Asymmetric Information and Equilibrium without Process
- 6 FCC Spectrum Auctions and Combinatorial Designs: Theory and Experiment
- 7 Psychology and Markets
- 8 What Is Rationality?
- PART III PERSONAL EXCHANGE: THE EXTERNAL ORDER OF SOCIAL EXCHANGE
- PART IV ORDER AND RATIONALITY IN METHOD AND MIND
- References
- Index
Summary
We suffer more … when we fall from a better to a worse situation, than we ever enjoy when we rise from a worse to a better. Security, therefore, is the first and the principal object of prudence. It is averse to expose our health, our fortune, our rank, or reputation, to any sort of hazard. It is rather cautious than enterprising, and more anxious to preserve the advantages which we already possess, than forward to prompt us to the acquisition of still greater advantages.
Smith (1759; 1982, p. 213)Psychology's Challenge to Constructivist Rationality
Researchers in psychology and behavioral economics who study decision behavior almost uniformly report results contrary to constructivist rational theory (Hogarth and Reder, 1987). This is reinforced by the manner in which papers are solicited by national and international meetings of societies devoted to this specialty. Thus, on October 25, 2005, the following email announcement was sent:
The IAREP-SABE joint meeting on “Behavioural Economics & Economic Psychology” … in Paris, July 5–8, 2006. This Conference aims at providing a platform to the fast growing number of economists, psychologists, neuroscientists and other social scientists who wish to discuss, rigorously but open-mindedly, their latest research in this field. Relevant topics include all domains in which tenets of economic theory have been seriously and systematically challenged, along with all concerns of economic psychology (emphasis added).
- Type
- Chapter
- Information
- Rationality in EconomicsConstructivist and Ecological Forms, pp. 149 - 167Publisher: Cambridge University PressPrint publication year: 2007