Planning and Budgeting

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Mainstream economics is based on some assumptions and axioms which enable its theories and models to analyze the surrounding events in the simplest possible form. However, analyzing these assumptions and axioms demonstrates that many of them and their suggested models are baseless in the real world or in terms of the experimental studies. It has made the mainstream economics approach very vulnerable against different criticisms and has convinced many economists to revise substantially all general and ideological frameworks of this kind of economics and to offer alternative approaches. In this light, behavioral economics is an alternative approach for this. Accordingly, while providing a succinct review on the main approaches in policy-making in the field of economy, this paper underlines the axioms necessary for defining the general policies based on the behavioral economic approach, including heuristic decision-making, the importance of social behaviors, the importance of belief, etc. It also emphasizes the fact that policy-making models in economics are more complex and extensive than what is considered in the mainstream models.

Keywords: Behavioral Economics, Public Policy, Behavioral Theory, Rational Choice, Public Choice

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