Skip to main content
SpringerLink
Log in

Economic Decisions by Approved Principles

Rules of Thumb as Behavioral Guidelines

  • Chapter
Advances in Behavioral Economics

Part of the book series: Contributions to Economics ((CE))

  • 284 Accesses

Abstract

We discuss the relevance of the concept of rational behavior in economic theory and suggest, on the basis of modern brain research results, to abstain from this notion and instead to apply behavioral rules of thumb in decision-making, especially if these rules can be derived from rational problem solutions determined by individual economic agents. We give an example for our point of view which refers to a contribution by Baumol and Quandt (dy1964) on the pricing behavior of a monopolistic firm and which also emphasizes the general importance of dynamic analysis in economics.

We thank Hagen Bobzin, Siegen, for his comments on this paper.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Arrow K. J. (1987). Economic Theory and the Hypothesis of Rationality. See Eatwell et al. (dy1987, pp. 69–75)

    Google Scholar 

  2. Arthur, W. B. (1993). On Designing Economic Agents that Behave like Human Agents. Journal of Evolutionary Economics 3, 1–22.

    Article  Google Scholar 

  3. Baumol, W. J. and R. E. Quandt (1964). Rules of Thumb and Optimally Imperfect Decisions. American Economic Review 54, 23–46.

    Google Scholar 

  4. Berk, J. B., E. Hughson, and K. Vandezande (1996). The Price is Right, But Are the Bids? An Investigation of Rational Decision Theory. American Economic Review 86 (4), 954–970.

    Google Scholar 

  5. Conlisk, J. (1996). Why Bounded Rationality? Journal of Economic Literature 34, 669–700.

    Google Scholar 

  6. Day, R. H., S. Morley, and K. R. Smith (1974). Myopic Optimizing and Rules of Thumb in a Micro-Model of Industrial Growth. American Economic Review 64 (1), 11–23.

    Google Scholar 

  7. von Ditfurth, H. (1976). Der Geist fiel nicht vom Himmel, Die Evolution unseres Bewußtseins. Hamburg: Hoffmann und Campe. (reprint 1993).

    Google Scholar 

  8. Eatwell, J., rdM. Milgate, and P. Newman (Eds.) (1987). The New Palgrave, A Dictionary of Economics. London: Macmillan.

    Google Scholar 

  9. Ellison, G. and D. Pudenberg (1993). Rules of Thumb for Social Learning. Journal of Political Economy 101 (4), 612–643.

    Article  Google Scholar 

  10. Etzioni, A. (1987). On Thoughtless Rationality (Rules of Thumb). Kyklos 40(4), 496–51

    Article  Google Scholar 

  11. Faller, A. (1995). Der Körper des Menschen, Einführung in Bau und Funktion, neubearbeitet von M. Schünke(12 ed.). Stuttgart: Georg Thie

    Google Scholar 

  12. Gandolfo, G. (1996). Economic Dynamics(3 ed.). Berlin: Springer.

    Google Scholar 

  13. Krusell, P. and A. A. Smith, Jr. (1996). Rules of thumb in Macroeconomic Equilibrium: A Quantitative Analysis. Journal of Economic Dynamics and Control 20, 527–558.

    Article  Google Scholar 

  14. La Salle, J. and S. Lefschetz (1961). Stability by Liapunov’s Direct Method with Applications. New York: Academic Press.

    Google Scholar 

  15. Lettau, M. and H. Uhlig (1999). Rules of Thumb Versus Dynamic Programming. American Economic Review 89(1), 148–17

    Article  Google Scholar 

  16. Lorenz, K. (1974). Die stammesgeschichtlichen Grundlagen menschlichen Verhaltens. InG. Heberer (Ed.), Die Evolution der Organismen,pp. 572–624. Stuttgart: Gustav Fischer.

    Google Scholar 

  17. Lorenz, K. (1975). Evolution des Verhaltens. Nova Acta Leopoldina, N. F. 42 (218), 271–290.

    Google Scholar 

  18. Lorenz, K. (1980). Die acht Todsünden der zivilisierten Menschheit (11 ed.). München: Piper.

    Google Scholar 

  19. Popper, K. R. and J. C. Eccles (1977). The Self and Its Brain: An Argument for Interactionism. Berlin: Springer. The enlarged German version has the title: Das Ich und sein Gehirn, 7. Aufl., München: Piper, 1987.

    Book  Google Scholar 

  20. Rosenthal, R. W. (1993). Rules of Thumb in Games. Journal of Economic Behavior and Organization 22, 1–13.

    Article  Google Scholar 

  21. Schütz, E., H. Caspers, and E.-J. Speckmann (1982). Physiologie, Lehrbuch für Studierende (16 ed.). München: Urban und Schwarzenberg.

    Google Scholar 

  22. Sen, A. (1987). Rational Behavior. See Eatwell et al. (dy1987, pp. 68–76).

    Google Scholar 

  23. Simon, H. A. (1955). A Behavioral Model of Rational Choice. Quarterly Journal of Economics 69, 99–118.

    Article  Google Scholar 

  24. Simon, H. A. (1957). Models of Man. New York: Wiley.

    Google Scholar 

  25. Simon, H. A. (1979). Models of Thought. New Haven: Yale University Press.

    Google Scholar 

  26. Will, H. C. U. (1998). On the Interdependencies among Information, Organization, and Incentives. Ph. D. dissertation, University of Bonn, Bonn.

    Google Scholar 

Download references

Authors
  1. Walter Buhr
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Thomas Christiaans
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie (Mikroökonomie), Europa-Universität Viadrina, Grosse Scharrnstraße 59, 15230, Frankfurt (Oder), Germany

    Friedel Bolle

  2. Institut für Theoretische Volkswirtschaftslehre, Universität der Bundeswehr, Holstenhofweg 85, 22043, Hamburg, Germany

    Michael Carlberg

Rights and permissions

Reprints and permissions

Copyright information

© 2001 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Buhr, W., Christiaans, T. (2001). Economic Decisions by Approved Principles. In: Bolle, F., Carlberg, M. (eds) Advances in Behavioral Economics. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-57571-6_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-57571-6_4

  • Publisher Name: Physica, Heidelberg

  • Print ISBN: 978-3-7908-1358-6

  • Online ISBN: 978-3-642-57571-6

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation