ASSIGNMENT - 1

BEHAVIORAL ECONOMICS
SHARATH KUMAR -202PGE026

On Narrow Norms and Vague Heuristics: A Reply to Kahneman and Tversky (1996)
This paper talks about how human beings follow their own strategy and how they react in
terrible conditions in many areas of human behaviour or psychology,  throughout the evolution
of human beings. It is said that people are equipped with a stock of strategies to solve the
problems they face in real time. Previous work has also demonstrated that in situations where
people receive feedback on the accuracy of their conclusions, significant learning effects occur,
so that simple heuristics that work well in an environment are also suitable for describing the
conclusions of people. And in this work, the important purpose of the heuristics and bias
program was to understand the cognitive processes that produce valid and invalid judgments.
Therefore, it explains that none of the questions posed by Kahneman and Tversky's heuristic and
biases programs had a major stimulating effect on the research. Finally the models are very
helpful to understand and predictions of the human behavioural things whether valid or invalid
judgments in the real world.

Gigerenzer's Normative Critique of Kahneman and Tversky

    This paper explains, in three directions of psychology, that could be contrary to Kahneman's
views in one way or other way. Unfortunately, the Kahneman is an opponent of the analytic,
whose critical views of intuition are limited in their justification. He spent much  time on giving
examples of decision-making errors, without highlighting cases where intuition can lead to a
solution where analysis itself is useless. We can find different approaches that differ slightly
from Kahneman's original theory. However, author here concludes on two important points. First
one being, we all know now that there are scenarios where people are prone to wrong judgments.
While these scenarios are considered unnatural or exist due to the application of bad logic, it's
still good to know that they exist and where they exist. Second one is, while there are many
different theories out there these days, Kahneman still did his work by being one of the first
researchers to push the boundaries of common assumptions and combine economic theory with
psychological experimentation.