ABSTRACT
Explanations of economic behavior often fall into one of two camps: normative and descriptive. Normative accounts typically consist of attempts to fit a wide variety of phenomena into one broad theoretical framework consisting of a single set of axioms governing rational decision making (e.g., von Neumann & Morgenstern, 1944). Descriptive approaches, in contrast, consist of attempts to accurately describe how individuals actually behave, regardless of whether these accounts are consistent with any particular normative approach to rational decision making (Gilovich, Griffin, & Kahneman, 2002; Hogarth & Reder, 1987). What makes this normative-descriptive distinction so intriguing is the observation that many descriptive accounts of economic behavior are often strikingly inconsistent with normative models. It turns out that this contradiction between how people ought to behave, according to normative models, and how they actually do behave, as evidenced by descriptive accounts, is a puzzle that has intrigued observers of human nature for centuries.
