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Institutional Analysis of Bounded Rationality of the Contemporary Russians

Institutional Analysis of Bounded Rationality of the Contemporary Russians

Journal of Institutional Studies, , Vol. 9 (no. 4),

The paper argues that behavior of present-day Russians is inconsistent with standard Neoclassical economics and can be better explained by the synthesis of various branches of Institutionalism and Post Keynesianism. Authors try to show that the present-day Russians are characterized by bounded rationality when they invest in health and financial assets, by fits and starts spend their incomes and cannot predict future levels of these incomes. Sometimes such bounded rationality manifests itself as investor myopia – a phenomenon that describes a situation when people exclude future variables from consideration starting from some threshold point of time. Investor myopia can lead to negative investment in health via smoking and heavy drinking, and also generate non-rational saving behavior. Furthermore, the contemporary Russians behave in the opportunistic manner. In particular, in the course of important examination writing the majority of people prefer to cheat off. Finally, the social pressure modifies the consumptive choice of the present-day Russians; in other words, this choice is not intrinsic. These statements are verified on the base of opinion poll findings by authors in 2016 and 2017. Sample included 521 persons, mainly young people. These data are analyzed by means of econometric – binomial and multinomial logit-models. The results of these studies show that the contemporary Russians are really characterized by bounded rather than perfect rationality. One of the conclusions is that fee-paying educated students are significantly less rational in their saving choice.

Keywords: bounded rationality, investor myopia, opportunism, investment in capital health, savings

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