Intuition and behavioural economics: A very brief history

This chapter presents the views of Adam Smith, John Maynard Keynes, Herbert Simon and Frank Knight on intuition and decision-making. The argument is presented that these economists argue that although using intuition to facilitate decision-making is highly inconsistent with neoclassical behavioural norms intuition can generate effective decisions in an efficient manner. This is so because intuition is a decision-making heuristic that is a good fit for real-world human decision-makers with their cognitive limitations. This runs contrary to the narrative presented by Kahneman and Tversky where intuition, because it is inconsistent with neoclassical behavioural norms, yields persistent errors in decision-making. Simply because humans violate neoclassical behavioural norms does not imply that their behaviour is biased and error-prone. Intuition can actually yield superior outcomes.