The decision-making process between convention and cognition

Title: The decision-making process between convention and cognition
Issue: Vol. 8, No 1, 2015
Published date: 20-05-2015 (print) / 20-05-2015 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Alessandro Morselli
Keywords: Coordination, Decision, Economics, Psycholo- gy, Rationality
DOI: 10.14254/2071-789X.2015/8-1/16
Language: English
Pages: 205-221 (17)
JEL classification: D81, D83

The main research on the cognitive foundations of the economy has claimed for many years that there is a clear separation between the theory of economic rationality and the psychology of reasoning and economic decision. More recently, the relationship between the two disciplines has become increasingly tight and cross-fertilizing. While Eco- nomics proposes normative theories about what it means to decide rationally, Psychology provides an explanation as to why individuals frequently make irrational decisions. The role of intuition in decision-making, as well as the ef- fect of emotions, are also relevant. The issue of rationality should then be tackled by finding appropriate restrictions of the definition of the term ‘rational’, which in its com- mon usage stands for ‘reasonable’ and/or ‘acceptable to rea- son’. Economics and psychology can then find a common and useful ground of discussion by focusing on coherence rather than on substance. (Legrenzi and Girotto 1996). As acknowledged by the mainstream theory, the notion of Bounded Rationality (Simon 1972) is central in explaining the failures of human decision making processes. Therefore took this concept as our starting point in the analysis of the complexity behind the individual choices, taking into ac- count the cross-fertilizing relationship between economics and psychology.