The research reported in this book was initiated during 1968–9 with the support of a Ford Foundation faculty fellowship. Initially, the work was intended to be confined to an application of the Bush–Mosteller model of reinforcement learning to the economic theory of the firm. Discussions with colleagues, however, both individually and in seminars, made it clear that the fundamental premises of psychological learning theory are very difficult for economists to accept. In fact, it has often happened that seminar presentations that have been intended to outline specific applications of learning theory have been sidetracked into issues that, to a psychologist, have not gone beyond first principles.

Whether or not these elementary principles of behavior will finally become a part of economic theory, they certainly are not generally available in the economics literature or in contemporary textbooks. Thus, unlike models developed under conventional maximization theory, any economic model that makes use of adaptive theories of behavior must be prefaced with a development and defense of the underlying paradigm.

Therefore, it was decided that a book would be the best format for presentation of research in this area. A book can provide space for discussion and analysis of a variety of relevant psychological issues that cannot be compressed effectively into journal-length introductions. Having completed this basic material, it is then possible to present quite a wide variety of applications of the underlying theory without needing to repeat or redevelop the introduction. Moreover, one can take the opportunity at the same time to demonstrate that the formal theory of adaptive behavior has a great diversity of applications and is not confined to just one or two specific problem areas.