Title
DIVERSITY IN ECONOMIC DECISION-MAKING AND BEHAVIOUR:A NEW BRIEF REVIEW
Authors
Abstract
Taking into account the relevant literature, it is argued in this review that importantadvances can be made in the application of decision sciences to economics if greater
attention is given to the presence of diversity in the types of economic decisionmaking and behaviour. This is of particular significance for understanding market
dynamics. This requires both rational and irrational types of decision-making to be
taken into account. A limitation of neoclassical and much mainstream economic
theory in its lack of consideration of this diversity and its economic consequences.
Different types of rational and irrational choices are specified in this article. Even
rational decision-making and behaviour can be quite diverse. Empirical evidence is
provided of diversity in economic decision processes and the consequences of this
diversity is noted. Most attention is paid to the influence on the dynamics and
stability of market systems of the diversity of the beliefs and behaviour of market
participants. It is shown how a preponderance of sticky decision-making or
restrained reactions in markets can improve the dynamics of their adjustment when
market equilibrium alters or a market is disturbed but its equilibrium remains
unchanged. It is observed that these reactions can be socially beneficial. Several
different restrained forms of decision-making and behaviour are identified which
make for stickiness in market behaviour and decision-processes.
Keywords
Economic attentiveness, economic diversity, market dynamics, market stability, rationality, sticky decisions
Classification-JEL
D9, E7
Pages
351-368