A Paradigm Shift in the Quantitative Assessment of Behavioral Economic Models: Re-evaluating Rational Actor Assumptions

Abstract

This paper investigates the critical shortcomings of traditional rational actor models in behavioral economics, emphasizing the need for an updated framework to account for psychological factors influencing economic decisions. Employing advanced econometric techniques and a dataset spanning two decades, we analyze deviations from rationality across multiple demographic segments. Our findings reveal significant behavioral anomalies that challenge established economic theories, suggesting that conventional models may inadequately predict real-world economic behaviors. This study contributes to a growing body of literature advocating for a more nuanced understanding of economic decision-making processes, paving the way for revised theoretical foundations and empirical methodologies in economics research.