Smart Economic Decision-Making in a Complex World

✍ Scribed by Morris Altman

• Publisher: Academic Press
• Year: 2020
• Tongue: English
• Leaves: 284
• Edition: 1
• Category: Library

✦ Synopsis

Smart Economic Decision-Making in a Complex World is a fresh and reality-based perspective on decision-making with significant implications for analysis, self-understanding and policy. The book examines the conditions under which smart people generate outcomes that improve their place of work, their household and society. Within this work, the curious reader will find interesting open questions on many fascinating areas of current economic debate, including, the role of realistic assumptions robust model building, understanding how and when non-neoclassical behavior is best practice, why the assumption of smart decision-makers is best to understand and explain our economies and societies, and under what conditions individuals can make the best possible choices for themselves and society at large.

Additional sections cover when and how efficiency is achieved, why inefficiencies can persist, when and how consumer welfare is maximized, and what benchmarks should be used to determine efficiency and rationality.

✦ Table of Contents

Front matter
Copyright
Dedication
Endorsements
Acknowledgements
Introduction: Smart thinking in the real world of complexity
What this book is all about
Appendix: Background sources for, smart economic decision-making in a complex world
References
The evolution of decision-making: Why institutions and capabilities matters
Introduction
Assumptions matter and behavioural economics
The conventional wisdom and the different faces of behavioural economics
The bounded rationality approach in context
Satisficing and procedural rationality in context
X-efficiency theory and external benchmarks for optimal behaviour
Nudging versus constraints change and redesign
Conclusion
References
How complexity affects decision-making
Introduction
Key points of overlap: Hayek and behavioural economics
Assumptions matter
Revisiting complexity and the expert
Contemporary views on bottom-up decision making and individualized norms for rationality
Ecological rationality and the spontaneous order
Opening the door to intelligent design
Opening the door to multiple equilibria: Casting shadows on the spontaneous order and ecological rationality
Conclusion: Hayek’s Golden nugget in decision-making theory
References
Freedom of choice in a complex world
Introduction
Multiple equilibria in consumption
Multiple equilibria in production: An introduction
Multiple equilibria in production: X-inefficiency and managerial slack
Multiple equilibria in production: X-inefficiency and agency
Multiple equilibria in production: Some related scenarios
Historical and logical time
Rent seeking and x-efficiency
Conclusion
References
Understanding rational inefficiency: A scientific basis for economic failure and success
Introduction
Introducing rationality and rational inefficiency
Institutions, efficiency, and rationality
Different types of rationality
Production inefficiency
Consumption inefficiencies
Macroeconomic choices and rational behaviour
Conclusion
References
How consumers can achieve freedom of choice: When consumers are truly sovereign
Introduction
An alternative model of preference formation
Conventional perspectives and critiques
Constructing an alternative theory of welfare maximization
Choice x-inefficiency and x-inefficiency in production
Conclusion
References
Inside the black box of the firm: Why choice, power and preferences matter for productivity and efficiency
Introduction
Origins of efficiency wage theory
Real wages, effort variability, and efficiency wages
Efficiency wage theory revised
Foundations of x-efficiency theory
Linking x-efficiency and efficiency theories
Conclusion
References
How smart people can be involuntarily employment when misguided policy dominates decision-making
Introduction
Keynes and the real wage rate
Keynes and the demand side
The behavioural model and employment
Conclusion
References
Why financial literacy matters for socio-economic wellbeing
Introduction
The conventional wisdom
Fast and frugal decision-making and smart heuristics
Institutions matter
Errors and biases and ‘irrational’ heuristics
Financial education and literacy and the different faces of behavioural economics
Linkages between financial issues, financial education, and financial literacy
Pensions and saving
Investing in financial assets
Bubbles and busts: Animal spirits and decision-making
Informational problems and errors in decision making
The trust heuristic
Ponzi schemes and the trust heuristic
Conclusion: Economic theory, financial literacy and public policy
References
How labour markets really work
Introduction
What is behavioural labour economics
Modelling labour supply: A standard rendering
A behavioural model of labour supply: A target approach
Non-labour market income and labour supply
Unemployment insurance and labour supply
Non-economic variables and errors or biases in labour market decision-making
Demand for labour and the supply of effort
Efficiency wage and x-efficiency theory
Some labour market implications of generalized x-efficiency theory
Population growth with real women
Conclusion
References
Index
A
B
C
D
E
F
G
H
I
K
L
M
N
O
P
Q
R
S
T
U
W
X