IDEAS home Printed from https://ideas.repec.org/a/rnp/ecopol/ep1835.html
   My bibliography  Save this article

Environment of Low-Rational Preferences: Individual and National Features
[Пространство Слаборациональных Предпочтений: Индивидуальные И Национальные Особенности]

Author

Listed:
  • Zhdanov, Dmitry A. (Жданов, Дмитрий)

    (Russian Presidential Academy of National Economy and Public Administration)

Abstract

The motives which guide an individual making an economic choice traditionally attract attention of economic science. However, there is a certain lack of choice models oriented towards people’s irrational inclinations, which to an essential degree determine their economic behavior along with rational motives. The goal of the present research is to form a choice model which takes into consideration the expanded structure of demands that determine an economic individual’s choice in actual practice. The article provides a detailed overview of approaches of various economic schools to the nature and the extent of behavioral rationality of such an economic individual. Based on the broader view on decision making motives as well as the analysis of evolving limitations, the author introduces the term ‘low-rational managerial behavior’ as a mechanism of implementing the foregoing preferences, and presents examples from business practice. The author reviews the low-rational behavioral features inherent to dominating shareholders of companies. It is noted that their low-rational priorities affect such areas of business operations as establishing the organizational structure and the choice of CEOs, which results in resolving the agency problem. In conclusion, exemplified by BREXIT, it is shown that lack of attention to low-rational preferences not only prevents an accurate prediction of their choice, but can even change the course of a whole country. At the same time, taking these factors into consideration helps evaluate more clearly the real motives of individuals’ behavior.

Suggested Citation

  • Zhdanov, Dmitry A. (Жданов, Дмитрий), 2018. "Environment of Low-Rational Preferences: Individual and National Features [Пространство Слаборациональных Предпочтений: Индивидуальные И Национальные Особенности]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 108-133, August.
  • Handle: RePEc:rnp:ecopol:ep1835
    as

    Download full text from publisher

    File URL: https://repec.ranepa.ru/rnp/ecopol/ep1835.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    2. Siegwart Lindenberg, 2001. "Social Rationality as a Unified Model of Man (Including Bounded Rationality)," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 5(3), pages 239-251, September.
    3. Клейнер Г. Б., 2008. "Сущность И Структура Стратегии Предприятия," Современная конкуренция, CyberLeninka;Общество с ограниченной ответственностью «Синергия ПРЕСС», issue 6, pages 114-130.
    4. Митчелл У. К., 2010. "Рациональность Экономической Деятельности (Продолжение)," Terra Economicus, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего профессионального образования «Южный федеральный университет», vol. 8(1), pages 96-108.
    5. Вольчик В. В. & Зотова Т. А., 2011. "Адаптивная Рациональность И Экономическое Поведение В Эволюционном Контексте," Terra Economicus, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего профессионального образования «Южный федеральный университет», vol. 9(4), pages 54-64.
    6. Zhdanov, Dmitry (Жданов, Дмитрий), 2014. "Non-economic targets as a factor in the organization of the Russian corporations [Внеэкономические Цели Как Фактор Организационного Построения Российских Корпораций]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 99-109.
    7. Клейнер Г.Б., 2003. "К Методологии Моделирования Принятия Решений Экономическими Агентами," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 39(2), апрель.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zjdanov, Dmitriy (Жданов, Дмитрий), 2014. "Non-economic targets as a factor in the organization of the Russian corporations [Внеэкономические Цели Как Фактор Организационного Построения Российских Корпораций]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 143-156.
    2. Zhdanov, Dmitry (Жданов, Дмитрий), 2014. "Non-economic targets as a factor in the organization of the Russian corporations [Внеэкономические Цели Как Фактор Организационного Построения Российских Корпораций]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 99-109.
    3. Zdanov, Dmitriy (Жданов, Дмитрий) & Gumilevskaya, Olga (Гумилевская, Ольга) & Pakhomova, Galina (Пахомова, Галина), 2018. "Institutional Factors of Improving the Organizational Structure of Russian Holding Corporations [Институциональные Факторы Совершенствования Организационной Структуры Российских Корпораций Холдинго," Working Papers 051802, Russian Presidential Academy of National Economy and Public Administration.
    4. Oliver Linton & Esfandiar Maasoumi & Yoon-Jae Wang, 2002. "Consistent testing for stochastic dominance: a subsampling approach," CeMMAP working papers 03/02, Institute for Fiscal Studies.
    5. van den Bergh, J.C.J.M. & Botzen, W.J.W., 2015. "Monetary valuation of the social cost of CO2 emissions: A critical survey," Ecological Economics, Elsevier, vol. 114(C), pages 33-46.
    6. Heiko Karle & Georg Kirchsteiger & Martin Peitz, 2015. "Loss Aversion and Consumption Choice: Theory and Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 101-120, May.
    7. Shoji, Isao & Kanehiro, Sumei, 2016. "Disposition effect as a behavioral trading activity elicited by investors' different risk preferences," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 104-112.
    8. Muhammad Kashif & Thomas Leirvik, 2022. "The MAX Effect in an Oil Exporting Country: The Case of Norway," JRFM, MDPI, vol. 15(4), pages 1-16, March.
    9. Jonathan Meng & Feng Fu, 2020. "Understanding Gambling Behavior and Risk Attitudes Using Cryptocurrency-based Casino Blockchain Data," Papers 2008.05653, arXiv.org, revised Aug 2020.
    10. Daniel Fonseca Costa & Francisval Carvalho & Bruno César Moreira & José Willer Prado, 2017. "Bibliometric analysis on the association between behavioral finance and decision making with cognitive biases such as overconfidence, anchoring effect and confirmation bias," Scientometrics, Springer;Akadémiai Kiadó, vol. 111(3), pages 1775-1799, June.
    11. Robert Gazzale & Julian Jamison & Alexander Karlan & Dean Karlan, 2013. "Ambiguous Solicitation: Ambiguous Prescription," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 1002-1011, January.
    12. Boone, Jan & Sadrieh, Abdolkarim & van Ours, Jan C., 2009. "Experiments on unemployment benefit sanctions and job search behavior," European Economic Review, Elsevier, vol. 53(8), pages 937-951, November.
    13. Castro, Luciano de & Galvao, Antonio F. & Kim, Jeong Yeol & Montes-Rojas, Gabriel & Olmo, Jose, 2022. "Experiments on portfolio selection: A comparison between quantile preferences and expected utility decision models," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    14. Jos'e Cl'audio do Nascimento, 2019. "Behavioral Biases and Nonadditive Dynamics in Risk Taking: An Experimental Investigation," Papers 1908.01709, arXiv.org, revised Apr 2023.
    15. Luigi Guiso, 2015. "A Test of Narrow Framing and its Origin," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(1), pages 61-100, March.
    16. Breaban, Adriana & van de Kuilen, Gijs & Noussair, Charles, 2016. "Prudence, Personality, Cognitive Ability and Emotional State," Other publications TiSEM 9a01a5ab-e03d-49eb-9cd7-4, Tilburg University, School of Economics and Management.
    17. Martín Egozcue & Sébastien Massoni & Wing-Keung Wong & RiÄ ardas Zitikis, 2012. "Integration-segregation decisions under general value functions: "Create your own bundle — choose 1, 2, or all 3!"," Documents de travail du Centre d'Economie de la Sorbonne 12057, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    18. Howard Kunreuther & Erwann Michel-Kerjan, 2015. "Demand for fixed-price multi-year contracts: Experimental evidence from insurance decisions," Journal of Risk and Uncertainty, Springer, vol. 51(2), pages 171-194, October.
    19. Choo, Weihao & de Jong, Piet, 2015. "The tradeoff insurance premium as a two-sided generalisation of the distortion premium," Insurance: Mathematics and Economics, Elsevier, vol. 65(C), pages 238-246.
    20. Francesco GUALA, 2017. "Preferences: Neither Behavioural nor Mental," Departmental Working Papers 2017-05, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

    More about this item

    Keywords

    economic individual; economic choice; rational behavior; low-rational behavior.;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnp:ecopol:ep1835. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RANEPA maintainer (email available below). General contact details of provider: https://edirc.repec.org/data/aneeeru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.