Bounded rationality and market fluctuations

Article Abstract:

The impact of bounded rationality on market fluctuations is examined through a market model which considers the possibility that bounded rationality disturbs otherwise efficient decision making, the possibility that it causes optimizing behavioral guidelines with relatively inflexible guidelines, and the possibility that it introduces the cost of deliberating about a decision. Findings reveal that bounded rationality can either increase or decrease market fluctuations.

Analysis, Consumer behavior, Rational expectations (Economics)

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Object valence as a moderator of the framing effect on risk preference

Article Abstract:

Two experiments designed to evaluate the importance of valence, risk-preference and frame of reference on decision making are discussed. Results indicated frame of reference and valence alone fo not have the significant effect on risk preference that the two variables operating in conjunction have. One experiment included undergraduate students while the other used experienced managers as subjects. Results are discussed and compared.

Risk-taking (Psychology), Risk taking

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