Original scientific paper

Rationality and Emotions

Velimir Šonje ; National Bank of Croatia

Abstract

Economics and Sociology can provide a unique methodology for the analysis of choice and of allocation systems for scarce resources. Two fundamental axioms of economics - the axiom of maximizing utility and the axiom of rationality - should be more clearly interpreted. Rationality is bounded and is not reflected in calculus. Choice is driven by feelings and the role of feelings can be simulated by the role of prices in the model of constrained optimization. Feelings are influenced by norms and institutions generally, and preferences are stable. Within such a behavioral model it is possible to explain why the act of choice by equally rational agents between the same goods can lead to different behavior in different allocation systems.

Keywords

rationality; limited rationality; choice; norms; feelings

Hrčak ID:

154567

URI

https://hrcak.srce.hr/154567

Publication date:

31.12.1995.

Article data in other languages: croatian

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