Thorstein Veblen’s Institutional Economics and Daniel Kahneman and Amos Tversky’s Behavioral Economics: an analysis of convergent points

Abstract

Original Institutional Economics and Behavioral Economics are two approaches that have challenged the conventional economics of their time regarding decision-making. Therefore, considering the original Institutional Economics according to Thorstein Veblen and Behavioral Economics as stated by Daniel Kahneman and Amos Tversky, this study aims to analyze if they have any convergent elements. As the key issue investigated in this study is decision-making, the convergence among these approaches relies on their psychological foundations. The psychological basis of original Institutional Economics is North-American pragmatic philosophy. This study offers a psychological approach to social learning and the theory of cognitive dissonance as the psychological basis of Behavioral Economics.

JEL Classification: B52; D03.