I would note that the argument that "a bird in the hand is worth two in the bush" can certainly also be interpreted as a tale of risk aversion. If you have to let the one go you have to chase after the other two you might not get, well. So, if it is both effects, and you need two birds for the risk premium, then the saying should be "a bird in the hand is worth FIVE in the bush."
Behavioral economics clearly reflects a major multidisciplinary input into econ, with elements coming from psychology especially (what do people want and how do they really behave?) as well as sociology and philosophy and some other areas. The current grad micro texts still do not talk about the endowment effect or much of any of the rest of this stuff. Preferences are C-infinity smooth, which is violated by the endowment effect, and lots of other standard stuff goes out the window once one takes the behavioral/experimental stuff seriously.
BTW, Vernon Smith is very pro-laissez-faire, but I will give him credit for accepting facts. Thus, he is responsible for a bunch of experiments that show how ubiquitous the tendency to engage in speculative bubbling in finance is, even when people know what fundamentals are. This goes against the usual efficient markets nonsense that most pro-l-f types indulge in.
I just got back from looking at journals over at U.Va., where a recent paper in the QJE suggests that with enough "market experience" one can learn to "overcome" the endowment effect. Maybe, but this is a pretty special result. It looks awfully robust, most of the time for most people in most situations.
Oh and finally on all that Soviet culture stuff, Taganka Theater was one of the world's best and is still pretty good.
It may not count as culture but if one counts chess than one might as well count math as well, and in that area the Soviets were (and the post-Soviets still are) as good as anybody anywhere.
That's all from me for today, folks! Barkley Rosser ----- Original Message ----- From: "Wojtek Sokolowski" <sokol at jhu.edu> To: <lbo-talk at lbo-talk.org> Sent: Tuesday, June 10, 2003 1:15 PM Subject: RE: [lbo-talk] Economics drivel
> Jks:
>
> Btw, my response, which Barkley was so nice about, is not an economist's
> response; on the contrary. It's a cognitive science response based on
> empirical research into cognitive processing. (I studied this stuff with
> Bob Nesbitt and Paul Thagard at Michigan, became a convert.) If
> prospect theory (as one version of it is called) were incorporated
> systematically into economic theory, as Daniel Kahneman (last year's
> Noberl winner) and Aaron Tversky argued that it shoud be, it would rip
> the guts out of neoclassical economics, upend all its theorems, and make
> the whole thing an empirical science. Scary, huh? Cass Sunstein has
> started to do some owrk onalong these lines in his behavioral law and
> economics project.
>
>
> WS:
>
> This as precisely the point I tried to make in my original posting. If
> you add cognitive framing, you end up with multiple rationalities,
> because you can selectively filter in or out factors to be considered in
> a decision making process. In that situation, your main theoretical
> task is to predict which rationality operates under which circumstances
> rather than what will be th eoutput given a particular input.
>
> Wojtek
>
>
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>