Overview

Traditional economic and financial theory is being challenged because normative, prescriptive models derived from it are not predicting the behavior of successful producers, investors, or consumers as well as anticipated. Economists and psychologists are documenting anomalies at the individual level, in financial markets, and in natural economic settings. This opens the larger question of the importance of psychological, sociological, and other phenomena for financial and economic behavior. It even raises the issue of what economic rationality really is. This book surveys and examines the increasing evidence of economic anomalies. It argues for an eventual, comprehensive behavioral framework for economics and finance, but in the interim, indicates how the tendency to use rules of thumb might be taken into account to improve predictions about decision making. The book is aimed at those, including business executives and students, with intermediate-level preparation in economics or finance. Part I, however, is accessible to those with only an introductory course. Part II should prove useful to professionals in economics and finance who seek a solid introduction to this area. The presentation speculates about possible applications of a behavioral analysis to past and present public policy issues. It closes with guidelines for decision making that suggest how, in the absence of a comprehensive behavioral theory of economics and finance, to improve prediction about decision making by taking into account the heuristics, or rules of thumb, used by decision makers and the biases that those heuristics involve.

Full Product Details

Author:   Hugh H. Schwartz
Publisher:   Bloomsbury Publishing Plc
Imprint:   Praeger Publishers Inc
Edition:   Annotated edition
Dimensions:   Width: 15.50cm , Height: 1.70cm , Length: 23.50cm
Weight:   0.372kg
ISBN:  

9780275971045

ISBN 10:   027597104
Pages:   240
Publication Date:   30 September 2000
Recommended Age:   From 7 to 17 years
Audience:   College/higher education ,  Professional and scholarly ,  Undergraduate ,  Postgraduate, Research & Scholarly
Format:   Paperback
Publisher's Status:   Active
Availability:   Manufactured on demand  
We will order this item for you from a manufactured on demand supplier.

Table of Contents

Preface Introduction The Basic Argument The Overview Economic and Financial Decision Making: A Behavioral Approach Behavioral Considerations What Do Individuals and Enterprises Seek? The Objective(s) Underlying Economic and Financial Decisions Implementing the Objectives: Characteristics of the Process Major Anomalies and the Presumed Rationality of Financial and Economic Behavior Expectations and Expected Profits Behavioral Finance Possible Applications Guidelines for Decision Making Appendices Appendix A: Rules of Thumb (Heuristics) Appendix B: Entrepreneurial Response to Economic Liberalization and Integration Where To Go From Here: Bibliographical Suggestions Index

Reviews

Professor Schwartz makes an important contribution to acquainting economists with the existing foundations of a behavioral theory of economics, particularly, but not exclusively, those originating in psychology. -Business Economics With this volume, Schwartz has lowered the entry barriers to studying behavioral economics for serious students and scholars. We can hope that they will respond rationally, or at least quasi-rationally, by reading and taking the argument to heart. -Journal of Economic Organization and Behaviour ?Professor Schwartz makes an important contribution to acquainting economists with the existing foundations of a behavioral theory of economics, particularly, but not exclusively, those originating in psychology.?-Business Economics ?With this volume, Schwartz has lowered the entry barriers to studying behavioral economics for serious students and scholars. We can hope that they will respond rationally, or at least quasi-rationally, by reading and taking the argument to heart.?-Journal of Economic Organization and Behaviour ?It is an excellent book and an enjoyable read.... [T]hroughout the book the reader is offered considerable direction for further reading. Citations are numerous and well considered, and there are two appendices and a detailed, annotated bibliography. It is thus an excellent reference on top of being... the best introduction to this literature that I have seen.?-Journal of Economic Issues It is an excellent book and an enjoyable read.... [T]hroughout the book the reader is offered considerable direction for further reading. Citations are numerous and well considered, and there are two appendices and a detailed, annotated bibliography. It is thus an excellent reference on top of being... the best introduction to this literature that I have seen. -Journal of Economic Issues Rationality Gone Awry? reviews a wide range of evidence about how people make economic decisions, revealing large discrepancies between this evidence and the assumptions of the reigning classical theory. It thereby provides a welcome guide for those who wish to inject into economic theory some of the realism it requires in order to describe the real world of economic affairs or to offer realistic advice to businessmen and policy makers. -Herbert A. Simon Richard King Mellon University Professor Carnegie Mellon University Nobel Prize in Economics, 1978 Rationality Gone Awry? is at once the best and most effortlessly accessible primer on behavioral economics available in the marketplace. Readers will be especially pleased with Professor Schwartz's thoughtfully annotated bibliography. There is simply no better way to become acquainted with the ideas in this increasingly influential field. -Robert H. Frank Goldwin Smith Professor of Economics Cornell University I believe that Rationality Gone Awry? will make an excellent supplement to economics and finance courses which seek to provide students with a balance between the standard neoclassical theories and the real-world of actual decision making. Economics enrollments have been declining nation-wide over the past few years, perhaps in part due to the ever-widening gap between theory and reality. I believe that books such as [this] may help reverse this trend as students seem particularly thirsty for proof that the disciplines of economics and finance are willing to change in response to the profusion of disconfirming evidence regarding the veracity of their models. -Catherine S. Elliott Professor of Economics New College of the University of South Florida

I believe that Rationality Gone Awry? will make an excellent supplement to economics and finance courses which seek to provide students with a balance between the standard neoclassical theories and the real-world of actual decision making. Economics enrollments have been declining nation-wide over the past few years, perhaps in part due to the ever-widening gap between theory and reality. I believe that books such as [this] may help reverse this trend as students seem particularly thirsty for proof that the disciplines of economics and finance are willing to change in response to the profusion of disconfirming evidence regarding the veracity of their models. -Catherine S. Elliott Professor of Economics New College of the University of South Florida

Author Information

HUGH SCHWARTZ is Visiting Professor in the Department of Economics at the Federal University of Parana in Brazil./e He has taught at the University of Kansas, Yale University, and Case Western Reserve University and served as a Senior Economist at the Inter-American Development Bank. He left the bank to devote more time to the interrelationship between psychology and economics, particularly with respect to entrepreneurial decision makers.

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