Heuristics, psychological biases and (bounded) rationality in economic behaviour

This paper offers a survey of some meaningful steps that mark a paradigm shift in economic modelling, from neoclassical theory based on the concept of representative Homo oeconomicus, endowed with axiomatic perfect rationality, and behavioural economics, based on boundedly rational agents taking decisions on the basis of heuristics with possible biases driven by psychological issues and fast instinctive (evolutionary based) thinking. Some important experiments are described that stress the inconsistency between real economic systems and the axioms at the basis of the neoclassical theories. The presence of some regularities in the behavioural approach is evidenced, on which new theories and forecasting methods can be based to explain (and avoid) some of the more evident discrepancies between real individuals and the economic agents modelled in the framework of the neoclassical economic approach. The new paradigm which is emerging in economic modelling includes ideas and methods coming from evolutionary theory and dynamic complexity, hence staking a claim for an interdisciplinary approach involving economics, psychology, evolution, complexity, theory of games, mathematical modelling.