Hayek’s seminal contribution to theoretical neurosciences,The Sensory Order(1952) remains neglected in current efforts at integrating the neurosciences, psychology and economics. I defend the view that Hayek presents the case for an evolutionary alternative to leading paradigms in the field and look at two in more detail: the good-based model in neuroeconomics and the dual systems approach in behavioural economics. In both cases, essential Hayekian insights remain valid in the context of modern neuroscience, allow for taking account of recent research, and (...) sketch a dynamic and selectionist model of choice. (shrink)

This essay uses concepts from Adam Smith’s The Theory of Moral Sentiments to develop ideas about choice and welfare. I use those ideas to offer several challenges to common approaches to behavioral welfare economics and new paternalist policy making. Drawing on Smith’s dialectical concept of practical reason, which he develops in expositing ideas about self-awareness and self-judgment, I first argue that inconsistency need not be viewed as pathological. Inconsistent choices might indicate legitimate context-dependencies as individuals reflect over disjointed perspectives and (...) act accordingly. Understanding inconsistency as reasonable raises epistemic difficulties for identifying errant choices and designing corrective policies. Second, I draw on Smith’s theory of the impartial spectator to discuss dynamic aspects of welfare. Welfare is not simply a matter of preference satisfaction but involves a sense of progress and improvement towards better preferences. Smith’s account suggests that economists interested in welfare should focus on institutional arrangements that facilitate self-development. (shrink)

An explanation of the Dunning–Kruger effect is provided which does not require any psychological explanation, because it is derived as a statistical artifact. This is achieved by specifying a simple statistical model which explicitly takes the boundary constraints into account. The model fits the data almost perfectly.JEL ClassificationA22; C24; C91; D84; D91; I21.

Notre travail se donne pour objectif de montrer que le point de rupture entre l’économie néoclassique et l’économie comportementale réside dans la manière dont chacune définit la rationalité. Cette dernière était parfaitement unifiée par la maximisation. Mais Simon pose les fondements de l’économie comportementale en critiquant précisément le concept néoclassique de rationalité et en suggérant que l’agent suit des modes de raisonnement alternatifs. Bien que Kahneman et Tversky proposent une typologie de ces modes de raisonnements, ils les réunifient ultimement dans (...) la théorie des perspectives cumulative. La réunification de la rationalité constitue ainsi la pierre angulaire de la distinction entre ancienne et nouvelle économie comportementale et permet de rendre compte des débats contemporains entre Kahneman et Tversky, d’une part, et Gigerenzer, d’autre part, au sein de cette dernière. Codes JEL : A12, B13, B40, D01, D91. (shrink)

The rise of behavioral economics since the 1980s led to richer mutual influence between economic and psychological theory and experimentation. However, as behavioral economics has become increasingly integrated into the main stream in economics, and as psychology has remained damagingly methodologically conservative, this convergence has recently gone into reverse. At the same time, growing appreciation among economists of the limitations of atomistic individualism, along with advantages in econometric modeling flexibility by comparison with psychometrics, is leading economists to become more pluralistic (...) than psychologists about the ontology of behavioral causation and structures. This, combined with economists’ growing interest in network models, is drawing economists closer in theory and practice to sociologists who use quantitative or mixed methods. (shrink)

The voting paradox occurs when a democratic society seeking to aggregate individual preferences into asocialpreference reaches an intransitive ordering. However it is not widely known that the paradox may also manifest for anindividualaggregating over attributes of risky objects to form a preference over those objects. When this occurs, the relation ‘stochastically greater than’ is not always transitive and so transitivity need not hold between those objects. We discuss the impact of other decision paradoxes to address a series of philosophical and (...) economic arguments against intransitive (cyclical) choice, before concluding that intransitive choices can be justified. (shrink)

A common narrative among some behavioural economists and policy makers is that experimental psychology highlights that individuals are more like Homer Simpson than the Mr Spock imagined by neoclassical economics, and that this justifies policies aiming to ‘correct’ individual behaviours. This narrative is central to nudging policies and suggests that a better understanding of individual cognition will lead to better policy prescriptions. I argue that this Homer economicus narrative is methodologically flawed, and that its emphasis on cognition advances a distorted (...) view of public policies consisting in fixing malfunctioning individuals, while ignoring the characteristics of the socio-economic environment that influence individuals’ behaviours. (shrink)