ARTICLE TITLE: Behavioral Economics: Application of the Methods of Cognitive Psychology in Economics
AUTHORS: Shastitko A.
ABSTRACT: Behavioral economic theory is based on the revealed through experiments deviations in the behavior of people from the one assumed by the neoclassical economic theory. These deviations are defined as cognitive biases. At present behavioral economics does not offer a way to model the behavior of economic agents taking into account cognitive biases. This work describes one of the possible approaches to modeling preferences that does not imply neoclassical assumptions about their characteristics. The main idea of this approach is to model preferences as a result of memory. Also the decision making process on the basis of conscious and unconscious information processing is analyzed in the context of the rationality assumption of the neoclassical theory.
KEYWORDS: behavioral economics , experiment , cognitive biases , decision making process , preferences , rationality , memory , conscious , unconscious