Austrian behavioral economics

Abstract

This paper explores the potential for gains from trade between Austrian and behavioral economics, with a focus on how the two schools of thoughts can constructively critique each other. Among other things, the Austrian critique of behavioral economics would urge it to jettison its restrictive and axiomatic definition of rationality, and to treat humans as active agents rather than passive recipients of environmental and cognitive influences. Meanwhile, the behavioral critique of Austrian economics would push it to take more seriously the fundamental question of how individuals arrive at choices and to analyze how such choices can interact with ‘micro-institutional’ choice environments.

Hayek's extended mind: on the (im)possibility of Austrian behavioural economics

“…In the 1990s subjectivism, the emphasis on the heterogenous individual valuation of economic goods was hotly debated within the Austrian School of economics. In the Elgar Companion to 2 Following Earl (2016), Whitman (2022) acknowledges that this process need not always lead to adaptive solutions. For example, alcohol consumption can be a personally effective, but maladaptive, self-regulatory response to emotional distress.…”

“…The most obvious reason these findings are significant is that it is accepted between these two approaches, behavioural economics and radical subjectivism, that (normative) evaluation of decisions starts at the individual level. This makes sense for cognitive individualists for whom individual decisions can be approached as discrete units and evaluated as such (see Whitman, 2022).…”

“…Austrian economists have been quite receptive to the behavioural critique of rational choice theory and specifically of the idea of the mind as a logical computer (Koppl and Whitman, 2004; Rizzo and Whitman, 2020; Whitman, 2022). These authors have emphasized that Austrian economics has never been as wedded to utility maximization as mainstream economics and have therefore welcomed the behavioural critique.…”

Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources

“…The school emphasises the importance of individuals and their personal initiatives for economic processes (subjectivism). In addition, there is a negation of purely mathematical forms of representation of economic relationships (Lausanne School with its mathematically formulated models of neoclassicism) [13].…”

Introduction to the symposium on institutional analysis, market processes, and interdisciplinary social science

“…In this symposium, we invited scholars with relevant research experiences to investigate a potential union between the more cultural and anthropological disciplines such as behavioral psychology and sociology on the one hand, and the less formalized models of rationality common across heterodox approaches such as Austrian economics and other traditions on the other. Whitman's (2021) paper embraces this challenge most explicitly. As titled, his manuscript attempts to map out and explain the parameters of an overtly 'Austrian Behavioral Economics.'…”