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HARNESSING HEURISTICS FOR ECONOMIC POLICY

Published online by Cambridge University Press:  09 January 2018

Ramzi Mabsout
Affiliation:
American University of Beirut, P.O. Box 11-0236, Department of Economics, Beirut, Lebanon. Email: rm95@aub.edu.lb. URL: https://www.aub.edu.lb/fas/economics/Pages/mabsout.aspx.
Jana G. Mourad
Affiliation:
P.O. Box 70-890, Antelias, Lebanon. Email: janagmourad@gmail.com.

Abstract:

The effectiveness of heuristics has received contradicting interpretations in the behavioural sciences. We study the policy implications of two programmes that dispute the effectiveness of heuristics – the biases and heuristics and the fast and frugal heuristics programmes. While the first blames heuristics for most errors in judgement, the second posits heuristics as simple mental algorithms that work well in a range of environments. We argue that the fast and frugal programme is less paternalistic insofar as it models humans as effective decision-makers in a range of environments. However, in the rapidly changing environments of the 21st century, both are needed to inform evidence-based policies.

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Copyright © Cambridge University Press 2018 

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HARNESSING HEURISTICS FOR ECONOMIC POLICY
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