Published online by Cambridge University Press: 18 October 2022
This chapter questions whether evolution would have resulted in people inheriting the kinds of preference systems that economists normally assume, whose generic form offers little to explain responsiveness to price changes or what people mean if they say they “don’t like” something or “wouldn’t change for the world.” The chapter fills these gaps by exploring the relationship between cognitive rules and operating systems, emotions and values, via a novel extension of Kelly’s personal construct psychology, means-end-chain analysis, Hayek’s theory of the mind and the notion of brain plasticity, with the resulting synthesis providing foundations of the core modern behavioral notion of loss aversion as well as showing how people can change their minds through time even though they may have trouble accepting some new situations. This analysis centers on the complex cognitive architecture of the systems of thinking and neural networks that people build to make sense of the world, where change in one area may require collateral change elsewhere and the mind favors options that limit the amount of cognitive restructuring necessary to prevent reductions in its ability to make sense of the world.
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