@inbook{3fceb014bbca4b8aaf695295d0b410bd,
title = "Bounded rationality versus the heuristics and biases/nudging approaches to behavioural economics",
abstract = "This chapter explores various methodological approaches in behavioural economics and their implications for understanding human decision-making, public policy, and utility maximisation. It contrasts the bounded rationality (BR) framework with the heuristics and biases (HB) approach and the subsequent nudging methodology. The BR perspective emphasises decision-making within constraints, leading to satisficing rather than optimising. In contrast, HB focuses on cognitive biases and errors in decision-making, while the fast and frugal heuristics proposed by Gigerenzer argue for the effectiveness of simple decision rules. The nudging approach, rooted in HB, aims to improve decision outcomes by subtly guiding choices. The chapter also discusses the limitations of neoclassical economics and the importance of realistic modelling assumptions, highlighting how sociological and identity economics contribute to a more nuanced understanding of decision-making.",
keywords = "Bounded Rationality, Neoclassical Modelling, Optimal Outcomes",
author = "Morris Altman",
note = "Publisher Copyright: {\textcopyright} Swee-Hoon Chuah, Robert Hoffmann and Ananta Neelim 2025. All rights reserved.",
year = "2025",
month = feb,
day = "20",
doi = "10.4337/9781802207736.00041",
language = "English",
isbn = "9781802207729",
series = "Elgar Encyclopedias in Economics and Finance series",
publisher = "Edward Elgar Publishing Ltd.",
pages = "112--115",
editor = "Swee-Hoon Chuah and Robert Hoffmann and Ananta Neelim",
booktitle = "Elgar Encyclopedia of Behavioural and Experimental Economics",
address = "United Kingdom",
}