Rationality and Economics

Rationality and Economics

Books
Two Brains Running
By JIM HOLT
Published: November 25, 2011
In the conflict between intuitive and rational decision-making, which side wins?
About these ads

One Response

  1. The modern economics has traditionally portrayed human being as a perfectly rational and self-centered individual, so called “Homo economicus”. This notion, however, has been challenged by an increasing number of economists like Armin Falk from Bonn University who emphasize the importance of fairness and trust to human behavior. Falk in his research used M.R.I. to measure the reactions of brain when a person gets underpaid compared to his/ her identically tasked peer. In a different study, Falk together with economist Michael Kosfeld measured the heart rate variability of the tested subjects to see the physical impact of this unfair pay. Both studies have shown that fairness truly matters to people. Supportive to this claim is also a study by economist Alan Krueger who took a close look at the strike at Bridgestone/Firestone’s tire manufacturing plant in Illinois in the mid-1990s.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

%d bloggers like this: