Planning and Budgeting

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Today, in the eyes of most inside or outside economic observers, economics apparently equals to the elements of neo-classical economics in short, methods and solutions of neo-classical economies define the principles of economics. However, in spite of such dominance and notwithstanding all evident accomplishments of neo-classical economics, it has always been subject to myriads of critique and recommendations considering alternative options and methodical approaches. One of such approaches is the behavioral economics. The followers of the behavioral economics claim that its use of psychological and social principles has strengthened its economic analyses, and it has improved the specific characteristics of this field of study including theoretical insight, prediction of phenomena and suitable policies. These economists express that although the classical economics used to be interested in psychological principles, such a tendency has gradually diminished and in some cases, it has even led to confronting these principles. Yet, behavioral economists have employed pioneering studies of Katun and Herbert Simon, followed by the works of Kahenman and Tvrsky as well as others to succeed in bonding unification between these two. Each of these thinkers has contributed to this unification only to a limited extent, and there is a long way ahead to forge a close and systematic bond with the aim of forming a dominant paradigm.

Keywords: Behavioral Economics, Behavioral Theories, Bounded rationality, Expectations, Biases

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