Economics and behavioural economics

Peter Earl&s;s collection of articles on Behavioural Economics of 1988 is mainly concerned with bounded rationality. The idea of support-bargaining and money-bargaining rests on a very different psychology that is incompatible with neoclassical understanding. Behavioural theory is seen as complementary to economic theory, reflecting the limited significance of laboratory-derived behavioural theory on the neoclassical economic model. The support-bargaining process includes the defining of situation concepts by which interests and values can be identified. These situation concepts are akin to the &s;mental models&s; identified through behavioural psychology. The fusion of System 1 and System 2 is apparent in the idea of &s;intellectual support-bargaining&s;. In Support-Bargaining, Economics and Society it was suggested that Darwin underestimated the importance of self-preservation in human behaviour. Support-bargaining suggests that the sense of cognitive ease, confidence and intuitions of coherence are all bound up with the support-bargaining that brings individuals relief from their sense of personal insecurity.