A Practicum in Behavioral Economics II Section 2- Homo economicus Versus Homo sapiens

PART II . SECTION HOMO VERSUS HOMO SAPIENS We now turn to a discussion of the explicit axioms that distinguish Homo , and describe a central theory ( known as expected utility theory ) that evolved from these axioms in the century . The first two axioms are known as the Principal Rationality Axioms , and the second set of five axioms are known as Additional Rationality While we assume that Homo . et al . 1995 ) include two additional axioms among the Principal Rationality Axioms known as the and Continuity Axioms . Although important for understanding the approach to theory , these two axioms are not as germane to the ensuing discussion . Therefore , we leave their understanding to the reader of theory . BEHAVIORAL ECONOMICS

would never violate any of them , the extent to which Homo sapiens violate these axioms has been a foundational question in behavioral economics . In this section , we take a deep dive into the comparison between Homo and Homo sapiens . We begin in Chapter with an introduction to the axioms and principles that distinguish the rational choice behavior of Homo . We then examine the implications of these axioms and principles with respect to how economists have traditionally depicted Homo preferences , specifically their risk preferences . In Chapter , we explore how behavioral economists have adjusted the model of Homo to account for the reality of Homo sapiens choice behavior . We introduce two new and Regret provide the two main within which these adjustments are characterized . In Chapter , we investigate a variety of laboratory experiments that have measured the extent to which Homo sapiens deviate from the rationality axioms of Chapter . Chapter presents additional laboratory experiments designed to test the implications of the theories advanced in Chapter . 80 ARTHUR