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Abstract:
This paper is concerned with defining the characteristics of behavioral economics (BE), identifying the different strands of BE, and carefully comparing BE to mainstream or orthodox economics. An important question here is: Is BE an economic school of thought? It is noteworthy that BE is not strongly associated with a political economic ideology or particular substantive propositions as is the case with some other economic schools of thought. What distinguishes BE is its scientific practices and its guiding notions of what good scientific practice ought to be. In other words, BEs practice and espouse scientific methods that are different, at least, from those typical of mainstream economics (ME).

This paper develops an approach to comparing BE to other types of economics. The job of comparison is first to identify the key dimensions (related to its approach to science) along which BE, and its different strands, differs from ME, and second to use these dimensions to illustrate the differences. The desired dimensions of comparison are ones for which there are critical and important differences between BE and ME. Further, these dimensional differences are related to BE's critique of ME and how behavioral economists describe their attempts to distinguish themselves from ME. The dimensions selected for this use are: 1) narrowness, 2) rigidity, 3) intolerance, 4) mechanicalness, 5) separateness, and 6) individualism.

Comparing economic disciplines using the comparison dimensions is like locating places on a map, except that the map of the economic disciplines is a six dimensional one, not a two dimensional one. To locate a discipline on the map, it is necessary to have judgments of the discipline's location on each of the six dimensions. In a sense, we are discovering what BE is partly by finding out its characteristics, but partly by finding out its differences from certain other well known entities (disciplines).

After using these dimensions to characterize ME, they are used to characterize BE's strands starting with the two earliest strands of BE, those emanating from the work of Herbert Simon and George Katona. The other strands of BE considered here are psychological economics, Harvey Leibenstein's x-efficiency theory, George Akerlof and behavioral macroeconomics, behavioral finance, Vernon Smith and experimental economics, and the evolutionary theory of Richard Nelson and Sidney Winter. Other elements of BE that can not be classified in these strands are also considered.

Behavioral Economics, Economic Methodology, Schools of Economic Thought

Abstract:
This paper is concerned with defining the characteristics of behavioral economics (BE), identifying the different strands of BE, and carefully comparing BE to mainstream economics. The job of comparison is first to identify the key dimensions (related to its approach to science) along which BE, and its different strands, differs from ME, and second to use these dimensions to illustrate the differences. The dimensions selected for this use are: 1) narrowness, 2) rigidity, 3) intolerance, 4) mechanicalness, 5) separateness, and 6) individualism. After using these dimensions to characterize ME, they are used to characterize BE's strands.

Behavioral Economics, Economic Methodology, Schools of Economic Thought

Abstract:
The principal reason why economists have advocated environmental policies based on incentives is that their conception of business behavior derives from the neoclassical model of the firm. Businesses certainly do respond to profit incentives, but firms' behavior is also greatly influenced by socio-political considerations and their organizational capabilities. In recent years, a significant group of businesses that are highly innovative, competitive and socially responsible has emerged. These are not the firms that policy makers envisioned when they formulated command and control and market incentive environmental policies, i.e., control-oriented policies. Because of this, there is a need for new types of environmental policies. Thus, the first purpose of this paper is to propose a new class of environmental policies. The second purpose is to explain why the neoclassical model is deficient as a basis for environmental policy and to explicate the nature of a more appropriate model.

Control-oriented policies were designed for firms that behave like neoclassical firms. For high performance organizations (HPOs), what is needed is the opposite of control-oriented policy. What is needed is an environmental policy that takes advantage of HPOs commitment, responsibility, and trustworthiness. The appropriate policy should take into account that overall environmental performance is a product not just of firm behavior but of the whole environmental system of which firms are a part. What is needed is a commitment approach to environmental policy.

A commitment approach (CA) to environmental policy is first of all not a control-oriented policy. A CA is a nonregulatory approach in which firms are self-regulated. The CA is only for firms that are able to 1) make a commitment to high environmental performance and 2) develop the capabilities to meet these commitments. The environmental protection (EP) agency that administers the CA would be charged with selecting the particular "high commitment" (HC) firms that would be subject to the policy. Low and intermediate commitment firms would presumably continue to be regulated under the usual control-oriented environmental policies. The selected HC firms would be eligible for government technical assistance and information. In addition, the EP agency could aid the functioning of the environmental systems (ES) in which HC firms are embedded by, for example, providing education and information to these businesses' stakeholders. Finally, it would be necessary for the EP agency to accomplish periodic assessments of how ESs performance departs from the ideal and how these systems' operations require rectification.

Environment, Policy, Commitment, Self-regulation, Environmental Protection Agency, Social Responsibility

Abstract:
This paper reviews and synthesizes the most cogent and telling arguments concerning the deficiencies of economic rationality as a normative concept and based on these develops a more appropriate normative conception of rationality. A major argument of this paper is that economists need to utilize a conception of rationality, true rationality, that includes not only instrumental rationality but rationality of ends. A decision cannot be truly rational unless a person is choosing what is really best for that person considering 1) the long-term consequences of the individual=s behavior, 2) what the person=s sense of morality is, and 3) what gives the person real happiness. If true preferences represent what is really right and best for a person, then the ultimate of rationality, true rationality, means choosing in line with true preferences.

Rationality, Normative, Economic, True, Preferences, Metapreferences