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Behavioural Economics: Classical and Modern

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  • Selda (Ying Fang) Kao
  • K. Vela Velupillai

Abstract

In this paper, the origins and development of behavioural economics, beginning with the pioneering works of Herbert Simon (1953) and Ward Edwards (1954), is traced, described and (critically) discussed, in some detail. Two kinds of behavioural economics – classical and modern – are attributed, respectively, to the two pioneers. The mathematical foundations of classical behavioural economics is identified, largely, to be in the theory of computation and computational complexity; the corresponding mathematical basis for modern behavioural economics is, on the other hand, claimed to be a notion of subjective probability (at least at its origins in the works of Ward Edwards). The economic theories of behavior, challenging various aspects of 'orthodox' theory, were decisively influenced by these two mathematical underpinnings of the two theories

Suggested Citation

  • Selda (Ying Fang) Kao & K. Vela Velupillai, 2011. "Behavioural Economics: Classical and Modern," ASSRU Discussion Papers 1126, ASSRU - Algorithmic Social Science Research Unit.
    • Handle: RePEc:trn:utwpas:1126
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    References listed on IDEAS

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    Cited by:

    1. K.Vela Velupillai, 2012. "The Epistemology of Simulation, Computation and Dynamics in Economics," ASSRU Discussion Papers 1218, ASSRU - Algorithmic Social Science Research Unit.
    2. Piercarlo Frigero, 2017. "Reconsidering Communication Regarding Economic Phenomena. Some Hints from a Complexity Approach," Working papers 040, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    3. Ying-Fang Kao & K. Vela Velupillai, 2012. "Reconstructing a Computable and Computationally Complex Theoretic Path Towards Simon's Behavioural Economics," ASSRU Discussion Papers 1222, ASSRU - Algorithmic Social Science Research Unit.

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    More about this item

    Keywords

    Classical Behavioural Economics; Modern Behavioural Economics; Subjective Probability; Model of Computation; Computational Complexity. Subjective Expected Utility;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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