Multidimensional and Interdisciplinary Approach for Behavioral Economics

Abstract

Understanding the human mind is an issue still characterized by great complexity, despite the fact that over the years the field of neurosciences has made great advances and technology allowed a greater ability to explore the cognitive processes of the human being. In economics, it is important to consider how people’s mind regulates and classifies information for making decisions and the impact that their coding has on emotional reactions, feelings and choices.

Since the nineties, behavioral economics has taken on an increasingly important role, especially thanks to the contribution of psychologists Kahneman and Tversky, authors of the first model aimed at formalizing cognitive decision-making mechanisms in uncertain situations. This current of thought is opposed to the principles proposed by the classical economics, based on the hypothesis of rationality of decision makers, able through their choices to maximize the benefits of organizations. On the other side, a cognitive approach to the choices of economic agents considers the influence that a series of cognitive bias have on decision-making processes, which often lead to suboptimal results.

The models developed within the behavioral economics do not have as their ultimate goal to replace traditional economic models, but to contribute in providing an explanation of human behavior within the economic sphere that classical principles only partially recognize. Introducing a cognitive approach allows to understand more in depth both human nature and the limits of classical models.

The economic perspective assumes that decision-makers are rational and consistent with the objective of maximizing a subjectively expected utility; the behavioral perspective adds more realistic parameters related to the influence of social norms, emotions, environmental factors, taking into account that humans' powers of computation and cogitation are limited, and people are not consistent. Of course, when interpreting economic phenomena, the assumption of purely rational and coherent behavior is unlikely to be realistic. To understand the economic behavior, a multidimensional, interdisciplinary approach becomes necessary, the distance between different research communities must be reduced and opportunities from the integration of research methodologies must be pursued. Sociology, political sciences, psychology, neurosciences, biology, anthropology, can contribute in completing the analytical perspectives that are needed for the exploration of the human behavior in the economic field.