Economic theory and Psychological Data: Bridging the Divide

Andrew Caplin

    Research output: Chapter in Book/Report/Conference proceedingChapter

    Abstract

    As models are often subjected to empirical testing to evaluate their ability to predict economically sound choices, these models are also solved by means of using optimization measures that are grounded on understanding both the quantitative and qualitative links of the actual choice data to the models. What sets economics apart from the other social sciences is how the decision-theoretic methodology brings about influential positive externalities. Although this aspect of economics seems to be well-organized, others would notice how classical decision theory does not integrate psychological factors. This chapter attempts to illustrate the developments that have furthered the use of nonstandard economic models while also accounting for the new forms of "psychological data" which involves eye movements, neurological responses, and other such indicators in expanding economic theory.

    Original languageEnglish (US)
    Title of host publicationThe Foundations of Positive and Normative Economics
    Subtitle of host publicationA Hand Book
    PublisherOxford University Press
    ISBN (Electronic)9780199851768
    ISBN (Print)9780195328318
    DOIs
    StatePublished - Oct 3 2011

    Keywords

    • Classical decision theory
    • Decision-theoretic methodology
    • Economics
    • Nonstandard economic models
    • Psychological data
    • Social sciences

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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