The Organization of Experience
People make judgments and decisions all the time. No wonder that a lot of scientific branches are concerned with the theory of judgment and choice; economics, psychology, sociology, philosophy, biology, and medicine—to mention just some. Standard economic theory of choice differs from other disciplines by its treatment of normative and descriptive models of behavior, that is, models trying to answer the questions: “How should people behave?” and: “How do people actually behave?” respectively. More specifically, it is the conception of rationality of human behavior that sets off economics against other disciplines.
KeywordsProspect Theory Loss Aversion Rational Choice Theory Framing Effect Independence Axiom
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