Designing a Homo Psychologicus More Psychologicus: Empirical Results on Value Perception in Support to a New Theoretical Organizational-Economic Agent Based Model

Abstract

The study presents a new approach of modelling human behavior based on empirical evidence on individual differences in cognitive science and behavioral economics fields. Compared to classical studies of economics, empirical research makes use of the descriptive approach to analyze human behavior and to create models able to explain the behavior of investors and organizational traders in a more realistic way. Consistently, an economic assumption that has been strongly disputed by scientists is the concept of Homo Economicus, which is currently considered unable to capture all the details and variability that characterize human behavior (which we define, in opposition to the economic label, Homo Psychologicus). Thanks to recent empirical studies and the development of such advanced techniques as agent based models, new simulation studies are now capable of investigating a higher number of psychological variables. However, models which implement heuristics or fallacies often distribute these characteristics among all agents without distinction. The present study shows how it is possible to design multiple agents considering individual differences, which can have a different impact on organizational and economic behavior. Starting from several empirical studies, which show a negative relation between optimism and loss aversion, coefficients of the Value function of the Prospect theory have been reviewed to create agents characterized by different psychological strategies used to manage costs and risks.