Abstract

In this paper the authors review a variety of empirical findings, research directions and tenets of two paradigms in heuristics and bias research: of behavioral economics (following Kahneman and Tversky's findings), and of the less-is-more, i.e. ecological rationality research (which follows findings by G. Gigerenzer). While explaining empirical research in behavioral economics (BE), the authors describe a classical economic model of rationality, the rational choice theory, which is contradicted by results in behavioral economics. BE researchers use rational choice theory as a norm, so their findings are typically explained or documented by insufficient adjustment to, or by a bias from the rational norm. The second paradigm, however typically documents sufficiently good decisions made while using simple, frugal and smart heuristics, such as take-the- -best. It claims that irrationality in decision-making stems from the inappropriate application of the given heuristics in ecologically unsuitable situations.

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