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Habit, Decision-Making, and Rationality: Comparing Thorstein Veblen and Early Herbert Simon

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  • Olivier Brette
  • Nathalie Lazaric
  • Victor Vieira da Silva

Abstract

The article aims to contribute to the convergence between institutional and neo-Schumpeterian evolutionary economics. It intends to help unify the behavioral foundations of these two strands of thought by returning to the original views of their main historical inspirations. It thus proposes a comparative analysis of the theory of human behavior developed by Thorstein Veblen and Herbert Simon, respectively. The article notably discusses how Simon’s early work links together the notions of habit, rationality, and the decision-making process, and explores the extent to which his views are consistent with, complementary to, or divergent from Veblen’s. The article highlights several commonalities between Simon and Veblen’s views on habits. However, Simon departs from Veblen in developing a dual model of human behavior which clearly differentiates habit-based from decision-based behaviors. The article argues that neo-Schumpeterian evolutionary economists should go beyond this binary model and build on the pragmatist-Veblenian approach, in which these two dimensions are intimately entangled. This process could allow the economists in question to take advantage of the most valuable insights of institutional economics regarding the interactions between individual choices and habits and institutions.

Suggested Citation

  • Olivier Brette & Nathalie Lazaric & Victor Vieira da Silva, 2017. "Habit, Decision-Making, and Rationality: Comparing Thorstein Veblen and Early Herbert Simon," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(3), pages 567-587, July.
    • Handle: RePEc:mes:jeciss:v:51:y:2017:i:3:p:567-587
    DOI: 10.1080/00213624.2017.1353866
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    Cited by:

    1. Lorenzo Esposito & Giuseppe Mastromatteo, "undated". "In the Long Run We Are All Herd: On the Nature and Outcomes of the Beauty Contest," Economics Working Paper Archive wp_972, Levy Economics Institute.
    2. Brendan Markey-Towler, 2018. "A formal psychological theory for evolutionary economics," Journal of Evolutionary Economics, Springer, vol. 28(4), pages 691-725, September.
    3. Nathalie Lazaric, 2021. "Cognition and Routine Dynamics," Post-Print halshs-03402421, HAL.
    4. Bélyácz, Iván & Kovács, Kármen, 2021. "Az egyén kognitív korlátaitól viselkedésének előrejelezhetőségéig [From the cognitive boundaries of individuals to the predictability of their behaviour]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 132-149.
    5. Alexandre Chirat & Michaël Assous & Olivier Brette & Judith Favereau, 2022. "Herbert Simon’s experience at the Cowles Commission (1947–1954)," EconomiX Working Papers 2022-11, University of Paris Nanterre, EconomiX.
    6. Dung Phuong Hoang and Thong Huy Vu, 2020. "Debit Card Usage as a Rational Choice: The Moderating Effect of Cash Habit," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(1), pages 159-183, March.
    7. Kevin Maréchal, 2018. "Recasting the understanding of habits for behaviour-oriented policies in transportation," ULB Institutional Repository 2013/270475, ULB -- Universite Libre de Bruxelles.
    8. Steve Fleetwood, 2021. "A definition of habit for socio-economics," Review of Social Economy, Taylor & Francis Journals, vol. 79(2), pages 131-165, April.
    9. Lorenzo Esposito & Giuseppe Mastromatteo, 2024. "Behavioral economics and the nature of neoclassical paradigm," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 23(1), pages 45-78, December.
    10. Kevin Marechal, 2018. "Recasting the Understanding of Habits for Behaviour-Oriented Policies in Transportation," Sustainability, MDPI, vol. 10(4), pages 1-14, March.

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