Law and the Emotions

Chapter 5 - Understanding rational inefficiency: A scientific basis for economic failure and success

Rationality in decision making is commonly assessed by comparing choice performance against normative standards. We argue that such a performance-centered approach blurs the distinction between rational choice and adaptive behavior. Instead, rational choice should be assessed with regard to the way individuals make analytic decisions. We suggest that analytic decisions can be made in two different modes in which control processes are directed at different levels. In a RUN mode, thought is directed at controlling the operation of a decision strategy. In the JUMP mode, the individual analyses the interpretation of the decision situation as well as the appropriateness of alternative strategies. We suggest that a decision should be considered “rational” when an individual is able to switch between these modes and balance their interaction.

The standard random utility model assumes a fully rational and compensatory choice behaviour. However, various research studies have proven that non-compensatory /semi-compensatory choice behaviour is more realistic. This paper proposes a semi-compensatory framework for the discrete choice model that combines probabilistic choice set formation along with implicit choice constraints in choice making. It combines the Independent Availability Logit (IAL) with Implicit Constrained Multinomial Logit model (CMNL). The model is applied to investigate the mode choice behaviour of the Ottawa-Gatineau regions of Canada’s capital by using the household travel survey data. The explanatory power and elasticity measures of the proposed model are compared with IAL and MNL models. It is found that the IAL-CMNL model outperforms both IAL and MNL models and can reproduce the choice set formation process more effectively. The empirical investigation shows that the IAL-CMNL model results in relatively higher tolerance and softer constraints for cut-off violations compared to the IAL model. Elasticity calculations and outcomes of this research highlight the importance of capturing choice set formation and constrained choice behaviour in the choice modelling.

Using affective events theory to conceptualise nurses’ emotional behaviour: A scoping review

Second best toll pricing within the framework of bounded rationality

This paper will examine how pragmatism has created rational choice behavior in candidate selection. Pragmatism has resulted in single candidates for local heads, which makes local democracy uncompetitive. The research method used is an explanatory approach that aims to explain how pragmatism as a rational choice behavior in the local government head election. Data were collected, compiled and analyzed using Nvivo 12 Plus software. The results showed that political parties as political institutions are very pragmatic in the selection of candidates for local heads. The incumbents utilized the support of almost all political parties based on clientelistic and programmatic relations. This has led the candidate selection process to prioritize pragmatic aspects, especially financial support, acceptability, and electability of candidates. The candidate selection process no longer determines ideological values at the official candidate selection process. Financial support for candidates has the highest priority for political parties in determining their endorsements in regional head elections. Meanwhile, the acceptability aspect refers to the dominant acceptance of all elites, cadres, and the mass base of supporters of the selected candidate. Electability is also a priority, although it is considered that electability trends are dynamic and able to change based on the level of competition. The behavior of political party elite actors and local head candidates eventually forms a rational choice pattern that makes local democracy backsliding.

This paper discusses several concepts that can be used to provide a foundation for a unified, theory of rational, economic behavior. First, decision-making is defined to be a process that takes place with reference to both ‘subjective’ and ‘objective’ time, that distinguishes between plans and actions, between information and states and that explicitly incorporates the collection and processing of information. This conception of decision making is then related to several important aspects of ‘behavioral economics’, the dependence of values on experience, the use of behavioral rules, the occurrence of multiple goals and environmental feedback.

The contrast between self-interested behavior guided by rational choice and altruistic behavior guided by normative considerations is a central theme in the social sciences. This study suggests that market and market-like behavior, the context where self-interest is expected to dominate, is in fact often motivated by altruism. This argument is tested by examining a willingness to pay measure, a surrogate for the market that is finding substantial use in analyses of public policy. In particular, the ability of the Schwartz model of altruism to explain willingness to pay for recycled products is examined. Findings indicate that even as the Schwartz model has explained many purely altruistic behaviors, it also can explain self-reported willingness to pay. While economists often have noted the importance of rational choice in even the most intimate of human decisions, this study notes the importance of normative altruism in even the most calculated.

Decision Making in Recurrent Neuronal Circuits

Marianna Klochko and Peter Ordeshook address an under-studied issue from rational choice theory – the common assumption that individual time preferences are exogenous and fixed. They then present empirical evidence to suggest that this is not the case, exploring a computer simulation model that allows for the evolutionary change of time preferences. This is done, moreover, in the context of social networks that are themselves endogenously determined.

Marianna Klochko and Peter Ordeshook address an under-studied issue from rational choice theory – the common assumption that individual time preferences are exogenous and fixed. They then present empirical evidence to suggest that this is not the case, exploring a computer simulation model that allows for the evolutionary change of time preferences. This is done, moreover, in the context of social networks that are themselves endogenously determined.

PurposeHousing choice is always a complicated decision with its dual functions as a roof over the head and as an investment good. This paper aims to investigate the boundedly rational behaviours that affect the housing choice three bounded behaviours play roles in explaining the decision-making behaviour of homebuyers when they acquire/sell a property. These behaviours are endowment effect, loss aversion and herding, which have implications on the decision-making process.Design/methodology/approachThe research is based on cross-sectional questionnaires and collected from 587 respondents. Factor analysis and reliability tests were used to identify the latent construct of bounded rational housing choice behaviour. In the meantime, the study used one-way analysis of variance (ANOVA) to examine whether there are any differences in the housing choice based on the respondents’ demographic backgrounds.FindingsThe findings indicated that a total of 11 items were reduced to three factors that accounted for the decision-making in housing choice. There are significant differences in herding behaviour amongst respondents with different level of education and their purpose of looking for a house.Research limitations/implicationsThis paper helps to identify latent constructs that shed light on the housing choice, especially on the bounded rational behaviour.Originality/valueThis is one of the few studies to explore boundedly rational behaviours in housing choice from the angle of homebuyers. Previous studies addressed housing choice in terms of price, demand and supply in general but not on individual homebuyers. The results will be useful to developers, policymakers, homebuyers as well as scholars in understanding the decision-making process in housing choice.

We propose to model the consistency-preserving aspect of preference change after the fashion of belief revision. First, we discuss the formal properties of the preference notion. Second, we discuss the various consistency requirements imposed on preference sets. Third, we discuss representations of consistency-driven preference change and compare them to models of belief change. Last, we discuss the specific needs of introducing a priority index in models of preference change. We conclude that while the general input-assimilating framework from belief change can be transferred to preference change, several modifications are necessary. In particular, the input model has to be complicated with the introduction of a distinction between primary (non-linguistic) and secondary (linguistic) inputs. Sentential representation has to be used with somewhat more caution for preferences than for beliefs. The priority-setting mechanism has to be adjusted, and priority-related information must be included in the inputs.

Motherhood induces a drastic, sometimes long-lasting, change in internal state and behavior in many female animals. How a change in reproductive state or the discrete event of mating modulates specific female behaviors is still incompletely understood. Using calcium imaging of the whole brain of Drosophila females, we find that mating does not induce a global change in brain activity. Instead, mating modulates the pheromone response of dopaminergic neurons innervating the fly’s learning and memory center, the mushroom body (MB). Using the mating-induced increased attraction to the odor of important nutrients, polyamines, we show that disruption of the female fly’s ability to smell, for instance the pheromone cVA, during mating leads to a reduction in polyamine preference for days later indicating that the odor environment at mating lastingly influences female perception and choice behavior. Moreover, dopaminergic neurons including innervation of the β’1 compartment are sufficient to induce the lasting behavioral increase in polyamine preference. We further show that MB output neurons (MBON) of the β’1 compartment are activated by pheromone odor and their activity during mating bidirectionally modulates preference behavior in mated and virgin females. Their activity is not required, however, for the expression of polyamine attraction. Instead, inhibition of another type of MBON innervating the β’2 compartment enables expression of high odor attraction. In addition, the response of a lateral horn (LH) neuron, AD1b2, which output is required for the expression of polyamine attraction, shows a modulated polyamine response after mating. Taken together, our data in the fly suggests that mating-related sensory experience regulates female odor perception and expression of choice behavior through a dopamine-gated learning circuit.

The Effect of Macroeconomic News on Beliefs and Preferences: Evidence from the Options Market