Template-Type: ReDIF-Paper 1.0
Author-Name: Iain Embrey
Author-Name-First: Iain
Author-Name-Last: Embrey
Title: States of Nature and States of Mind: A Generalised Theory of Decision-Making, evaluated by application to Human Capital Development
Abstract: Canonical economic agents act so as to maximise a single, representative, utility function. However there is accumulating evidence that heterogeneity in thought-processes may be an important determinant of individual behaviour. This paper investigates the implications of a vector-valued generalisation of the Expected Utility paradigm, which permits agents either to deliberate as per Homo-economics, or to act impulsively. That generalised decision theory is applied to explain irrational educational investment decisions, persistent social inequalities, the crowding-out effect, the pervasive influence of non-cognitive ability on socio-economic outcomes, and the dynamic relationships between non-cognitive ability, cognitive ability, and behavioural biases. These results suggest that the generalised decision theory warrants further investigation.
Creation-Date: 2017
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2017_032.pdf
File-Format: application/pdf
Number: 209919485
Classification-JEL: D01, D81, D91, I24, I31, J24, J64, B41
Keywords: Decision Theory, Dual-Self, Behavioural Anomalies, Human Capital, Social Exclusion, Unemployment
Handle: RePEc:lan:wpaper:209919485