Pluralism in Economics for Control Perspective- myassignmenthelp

Question: Discuss about thePluralism in Economics for Control Perspective. Answer: Introduction Over the years, behavioral economics and neuroeconomics have made important contributions to the field of economics. Typically, neuroeconomics is a subfield of behavioral economics which utilizes empirical evidence of the limits on computation and willpower to create new models (Camerer, 2007). Mainly, it tries to explicate microeconomic theory on details regarding how the human brain operates (Camerer, 2007). Both behavioral economics and neuroeconomics seek to challenge economic models by proposing new insights from other fields to explain human behavior Camerer and Loewestein (2004). Thus, this essay shall discuss the criticisms of Gul and Pesendorfor (2008) on behavioral economics and neuroeconomics and establish which of the two fields is more compelling than the other using illustrations from an accounting and control perspective. Discussion According to Camerer and Loewestein (2004), behavioral economics boosts the descriptive power of economics because it offers the later a more realistic psychological foundation. On the other hand, neuroeconomics provides a system that grounds theories of economics in detailed neural systems which are articulated numerically to develop behavioral predictions (Camerer, 2007). It is noteworthy that both research programs criticize the conventional economic models and theories by proposing and offering new ideas and interpretations of human behavior (Camerer , Loewestein Prelec, 2004). While neuroeconomics utilizes neuroscience to better understand human behavior, behavioral economics tries to incorporate psychological foundations. Regardless, both research programs have received criticisms from Gul and Pesendorfor (2008) and other researchers. Criticisms of the Theory In their first criticism, Gul and Pesendorfor (2008) believe that neuroeconomics gravely misunderstands economic methodology. In addition, they argue that neuroeconomics underestimates the flexibility of conventional economic theories. In their opinion, psychology and economics address dissimilar questions, and thus use different abstractions (Gul and Pesendorfor, 2008). It follows, therefore, that the two research programs tackle different kinds of empirical evidence (Gul and Pesendorfor, 2008). For this reason, neuroeconomics lacks the ground and foundation to refute economic models (Gul and Pesendorfor, 2008). Mainly, this is due to the fact that it neither makes assumptions nor draws conclusions about the psychology of the brain (Gul and Pesendorfor, 2008). Equally, it cannot change economic models because it lacks structures that can successfully address the concerns of economics (Gul and Pesendorfor, 2008). In the same way, they postulate that typical economics are much more fl exible than neuroeconomics perceives it to be (Gul and Pesendorfor, 2008). In the same manner, this criticism applies to behavioral economics as it concurs with Camerer and Loewesteins (2004) view that behavioral economics largely focuses on the individual and, thus, is not applicable for macroeconomic theories hence making the two research programs different and incomparable. In another criticism, Gul and Pesendorfor (2008) suggest that neuroeconomics does not inform economic theory and is viewed mainly as a radical method. From their perspective, economists are very curious about the real contributions of the research program to economics. In fact, many are skeptical about whether neuroeconomics is needed in the field of economics (Harrison, 2008). Notably, this critic may also apply to behavioral economics. In the opinion of Levinson and Peng (2007), behavioral models are regarded as being universal. However, individual behaviors are often systematically influenced by their culture (Levinson Peng, 2007). Thus, the application of behavioral economics in standard economic models is rather vague and its contribution to economic theory may be debatable. What is more, researchers criticize both behavioral economics and neuroeconomics for the reason that these methods ignore the fact that economists, even when addressing questions similar to those studied in behavioral economics and neuroeconomics, have dissimilar objectives and address different empirical evidence. Therefore, Gul and Pesendorfor (2008) strongly reject the neuroeconomics presumption that there is a single set of facts for describing human behavior. In their explanation, they highlight the fact that Rabin (1998) omits the fact that behavioral economics, neuroeconomics and economics study different types of behavior and variables that influence human behavior (McCabe, 2008). Generally, realistic abstractions and assumptions when relating to intuitive cues to behavior is less helpful when relating to human behavior (McCabe, 2008). Further, the two researchers critique neuroeconomics understanding of the role of welfare analysis in the field of economics. Specifically, they strongly believe that the neuroeconomics assertion that economic welfare should utilize true utility instead of utilities that govern choice significantly misinterprets the function of welfare analysis in economics (Gul and Pesendorfor, 2008). From their perspective, neuroeconomics condemnation of the welfare analysis confuses the economic definition of welfare with the theory of happiness, which is not truly the case. In contrast, there is no critique on behavioral economics on the same concept so far. Illustration It is worth pointing out that behavioral economics is more appealing and convincing than neuroeconomics. Primarily, behavioral economics can be useful in the field of accounting and control. It is worth taking note of the fact that human behavior often deviates from rationality. For this reason, behavioral economics can be applied to aid in the decision making process. in accounting, the decision theory examines the reasoning behind an agents choices. It is closely related to game theory, it highlights the choices of an individual when faced by uncertainties. In the same way, behavioral theory can aid in explaining the rationale behind certain decisions made by an economic agent or accountant. Accountants can use such information to make sound decisions during the accounting process. Individuals can draw various explanations from behavioral economics. In turn, this example shows the importance of drawing upon both rational and non-rational aspects of human behavior to make informed c hoices. On the other hand, neuroeconomics does not show how such behavioral patterns can effectively contribute to decision-making. Conclusion All in all, all views taken into consideration the neuroeconomics approach is less compelling than the behavioral economics approach. Mainly, this is because neuroeconomics has more methodological problem and, thus, less applicable in decision making. References Camerer, C. F. Loewenstein, G. Prelec D. (2004 Neuroeconomics: Why economics needs brains. The Scandinavian Journal of Economics, 106 (3), 556-570 Camerer, C. F. Loewenstein, G. (2004). Behavioral Economics: Past, Present, Future. The Economic Journal, 1, 117. Camerer, C. F. (2007). Neuroeconomics: Using Neuroscience To Make Economic Predictions.The Economic Journal, 1, 117. Decision Theory and Human Behavior [PDF file]. University of Massachusetts. Retrieved from https://www.umass.edu/preferen/Game%20Theory%20for%20the%20Behavioral%20Sciences/BOR%20Public/BOR%20Decision%20Theory%20and%20Human%20Behavior.pdf Decision Theory. (2015). Principia Cybernetica Web. Retrieved on 16 Oct 2017 from https://pespmc1.vub.ac.be/ASC/DECISI_THEOR.html Decision Theory. (2015). Stanford Encyclopedia of Philosophy. Retrieved on 16 Oct 2017 from https://plato.stanford.edu/entries/decision-theory/ Gul, F., Pesendorfer, W. (2008). The case for mindless economics. The foundations of positive and normative economics, 3-42 Harrison, G. W. (2008). Neuroeconomics: A critical reconsideration. Economics and Philosophy, 24(3), 310-330. Levinson, J. D., Peng, K. (2007). Valuing cultural differences in behavioral economics. Journal of behavioral finance, 4, 32-47. McCabe, K. A. (2008). Neuroeconomics and the economic sciences. Economics and Philosophy, 24(3), 345-368.