Economic Theories on Bounded Rationality - Dictionary of Arguments
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Bounded rationality/economic theories/Jolls: Perhaps because both the nonomniscience aspect of bounded rationality and its nonoptimization aspect are so important and so widespread, it is common for behavioral law and economics to render bounded rationality in an aggregate fashion that draws in both aspects.
Nonomniscience: Throughout, “nonomniscience” will refer to the existence of empirically disconfirmable factual beliefs—for instance, that a supersized sugary drink contains only 1% of an individual’s proper daily caloric intake; (...).* Thus, if a representative group
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holds - as a group - beliefs that diverge from these figures, then at least some members of the group are exhibiting nonomniscience.
Nonoptimization: “Nonoptimization” (...) will refer to decision-making that is not in accordance with the optimizing behavior postulated by expected utility theory.
„Satisficing“/Herbert Simon/example: As an (...) illustration of the Simonian notion of an individual “satisficing” rather than choosing the option that is “optimal,” imagine an individual assessing whether a price offered for property (...) is at or above a level considered to be “acceptable.” The individual, Simon writes, “may regard $15,000 as an ‘acceptable’ price, anything over this amount as ‘satisfactory,’ anything less as ‘unsatisfactory’ ” and, accordingly, may accept the first offer received at or above $15,000 regardless of whether such acceptance is “optimal” (Simon, 1955(2), p. 104). >Optimism/Bibas, >Loss aversion/Bibas, >Plea bargain/Bibas, >Non-omniscience/Jolls, >Availability heuristic/Economic theories, >Risk perception/Economic theories.
* Compare the category of "judgment errors" in Jolls and Sunstein (2006)(1).
1. Jolls, Christine and Cass R. Sunstein (2006). “Debiasing through Law.” Journal of Legal Studies 35: 199–241.
2. Simon, Herbert A. (1955). “A Behavioral Model of Rational Choice.” Quarterly Journal of Economics 69: 99–118.
Jolls, Christine, „Bounded Rationality, Behavioral Economics, and the Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017