H.A. Simon, A. Tversky, D. Kahneman: decision-making and economic cognition should be empirically investigated
Lab experiments, surveys, computational modeling, etc.
How vs. why : procedural , not substantive, rationality
The judgment that certain behavior is “rational” or “reasonable” can be reached only by viewing the behavior in the context of a set of premises or “givens.” These givens include the situation in which the behavior takes place, the goals it is aimed at realizing, and the computational means available for determining how the goals can be attained. (Simon, 1986, p. 26)
Imagine that the United States is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the consequences of the programs are as follows:
If Program A is adopted, 200 people will be saved
If Program B is adopted, there is a one-third probability that 600 people will be saved and a two-thirds probability that no people will be saved
Which of the two programs would you favor?
Most of the respondent opted for A, the risk-averse solution.