Procedural Rationality and Happiness

Novarese, Marco and Castellani, Marco and Di Giovinazzo, Viviana (2009): Procedural Rationality and Happiness. Forthcoming in: Journal of Socio Economics

Abstract

The Economics of Happiness already recognizes how procedures affect the evaluation of outcomes, although this has only been looked at within the standard framework of substantial rationality. This paper aims to go beyond that kind of approach by linking happiness and procedural rationality, focusing on ‘happiness for choice’ (the individual’s perceived satisfaction after the decision making process). Simon’s model shows the need for defining aspirations whose values are adapted to the past experience in a given environment. Some remarks proposed by Scitovsky’s allow to extend this idea considering the role of creative representation of the world as a way for trying to go beyond the past. These ideas are tested using data on aspirations and satisfaction expressed by students attending an economic course.

• Item Type: MPRA Paper
• Language: English
• Keywords: Procedural rationality, satisfaction, students, happiness, aspirations
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness

References

Arrow, K. J., 1996. Preface. In: K.J. Arrow, E. Colombatto, M. Perlman and C. Schmidt (Eds.), The Rational Foundations of Economic Behavior, Proceedings of the IEA Conference held in Turin, Italy, New York: St. Martin’s Press, xiii-xvii.

Berlyne, D., 1963. Motivational Problems Raised by Exploratory and Epistemic Behavior, in: S. Koch (Ed.), Psychology: A Study of Science, vol. 5., McGraw-Hill, New York, 284—364.

Berlyne, D.E., 1971. Aesthetics and Psychobiology, Appleton Century Crofts, New York.

Chase, W.G., Simon, H.A., 1973. Perception in Chess. Cognitive Psychology 4, 55--81.

Conlisk, J., 1996. Why Bounded Rationality?, Journal of Economic Literature 34, 669—700.

Di Giovinazzo, V., 2008. From individual well-being to economic welfare. The Scitovsky contribution to the explanation of a Joyless Economy. European Journal of Economic and Social System 21 (1), 57-81.

Fernandes, R., Simon, H. A. 1999. A Study of how Individuals Solve Complex and Ill-structured Problems. Policy Sciences, 32, 225-45.

Foss, N., 2003. Bounded rationality in the economics of organization: ‘‘Much cited and little used”. Journal of Economic Psychology 24, 245—264.

Frey, B.S., Stutzer, A., 2002. Happiness and Economics: How the Economy and Institutions Affect Human Well-Being. Princeton University Press, Princeton.

Funke, J. 1991. Solving Complex Problems: Exploration and Control of Complex Systems, in Sternberg R. and Frensch P. (eds.). Complex Problem Solving – Principles and Mechanisms, Hillsdale, New Jersey, Lawrence Erlbaum Associates.

Gilbert, D. T., Ebert, E. J., 2002. Decisions and revisions: The affective forecasting of changeable outcomes. Journal of Personality and Social Psychology 82, 503--514.

Grimes, P.W., 2002. The Overconfident Principles of Economics Student: An Examination of a Metacognitive Skill. Journal of Economic Education 33, 15--30.

Harrison, J.R., March, J.G., 1984. Decision Making and Postdecision Surprises. Administrative Science Quarterly 29 (1), 26--42.

Hayek F. (1969), "The Primacy of the Abstract", in New Studies in Philosophy, Politics, Economics, and the History of Ideas, Chicago: University of Chicago Press.

Hebb, D.O., 1955. Drives and the C.N.S. (Conceptual Nervous System). Psychological Review, 62, 243--254.

Heiner, R.A., 1993. The Origin of Predictable Behavior. The American Economic Review, 73 (4), 560-595.

Lant, T., 1992. Aspiration Level Adaptation: An Empirical Investigation. Management Science 38 (5), 623--644.

Lant, T., Mezias, S.J., 1992. An Organizational Learning Model of Convergence and Reorientation. Organization Science 3(1), 47-71.

Levitt, B., March, J.G., 1988. Organizational Learning. Annual Review of Sociology 14, 319--340.

Lundberg, C.G., 2000. Made Sense and Remembered Sense: Sensemaking through Abduction. Journal of Economic Psychology 21 (66), 691--709.

March, J.G., 1994. A Primer on Decision Making. How Decisions Happen, The Free Press, New York.

Mezias, S.J., Chen, Y. and Murphy, P.R., 2002. Aspiration-Level Adaptation in an American Financial Services Organization: A Field Study, Management Science 48(10), 1285-1300.

Mullainathan, S., 2002. A Memory-Based Model of Bounded Rationality. Quarterly Journal of Economics 117 (3), 735--774.

Murphy, P.R., Mezias, S.J., Chen, Y.R., 2001. Adapting Aspirations to Feedback: The Role of Success and Failure, in: Lant, T.K., Shapira, Z. (Eds.), Organizational Cognition: Computation and Interpretation, Lawrence Erlbaum, Mahwah, N. J., 125-146.

Schmidtz, D., 2004. Satisficing as a humanly rational strategy, in: Byron, M. (Ed.), Satisficing and Maximizing. Moral Theorists on Practical Reason. Oxford University Press, New York, 30-58.

Scitovsky, T., 1976. The Joyless Economy: The Psychology of Human Satisfaction. Oxford University Press, Oxford.

Selten, R., 1998. Aspiration Adaptation Theory. Journal of Mathematical Psychology 42, 191—214.

Selten, R. 2001. What is Bounded Rationality?, in G. Gigerenzer, and R. Selten (eds.). Bounded Rationality: The Adaptive Toolbox. Cambridge, MA: MIT Press, 13–36.

Shapira, Z., 1996. Introduction and Overview, in: Shapira, Z. (Ed.), Organizational Decision Making. Cambridge University Press, New York.

Simon H.A. 1955. A Behavioral Model of Rational Choice. Quarterly Journal of Economics, 69, 99—118.

Simon, H.A. and March, J.G., 1958. Organizations, Wiley, New York.

Simon, H.A., 1972. Theories of Bounded Rationality, in McGuire, C.B., Radner, R. (Eds.), Decision and organization. North-Holland Publishing Company, Amsterdam, 161-176.

Simon, H.A., 1976. From substantive to procedural rationality, in: Latsis, S.J. (Ed.), Method and appraisal in economics. Cambridge University Press, Cambridge, 129-148.

Simon, H.A., 1978. Rationality as Process and as Product of Thought. The American Economic Review 68 (2), Papers and Proceedings of the Ninetieth Annual Meeting of the American Economic Association, 1--16.

Simon, H.A., 1981 (2nd ed.). The Science of the Artificial. MIT Press, Cambridge, Mass.

Simon H.A. 1983. Reason in Human Affairs, Stanford University Press, Stanford.

Simon H.A. 1985. Models of Bounded Rationality, vol.3, Massachusetts Institute of Technology, Cambridge, Mass.

Simon, H. A., 1987. Rationality in Psychology and Economics, in Hogarth, R.M., Reder, R.W. (Eds.), Rational choice. University of Chicago Press, Chicago, 25-40.

Simon H.A. 2000. Bounded Rationality in Social Science: Today and Tomorrow. Mind & Society, 1, 25—39. Slote, M., 1989. Beyond Optimizing. Harvard University Press, Cambridge, Mass.

Vanberg, V. J., 2002. Rational Choice vs. Program-based Behavior: Alternative Theoretical Approaches and their Relevance for the Study of Institutions, Rationality and Society, 14 (1): 7-54.

Vanberg, V. J., 2006. Rationality, Rule-Following and Emotions: On the Economics of Moral Preferences, Working paper. Max Planck Institute of Economics Evolutionary Economics Group.

Vosniadou, S., Ortony, A., 1989. Similarity and Analogical Reasoning: A Synthesis, in: Vosniadou, S., Ortony, A. (Eds.), Similarity and Analogical Reasoning, Cambridge University Press, New York.

Vromen, J. 2004. Routines, genes and program-based behaviour. Papers in economics and Evolution, Max Planck Institute, 1—30.

Watzlawick, P. 1984. The Invented Reality: How Do We Know What We Believe We Know? (Contributions to Constructivism), W. W. Norton & Company, New York.

Wiseman, R.M., Bromiley, P., 1996. Toward a Model of Risk in Declining Organizations: An Empirical Examination of Risk, Performance and Decline. Organization Science, 7 (5), 524--543.