Teaching the Use of Cost-Benefit Reasoning in Everyday Life

Our research shows that people can apply the cost-benefit rules of microeconomic theory to their everyday decisions. Two populations were examined: (a) people who had previously received extensive formal training in the rules and (b) naive subjects who were randomly assigned to receive brief training in the rules. Training affected reasoning and reported behavior in both populations. The results indicate that extremely general rules govern choices across a wide range of domains and that use of the cost-benefit rules can be improved through training. © 1990, Association for Psychological Science. All rights reserved.

Duke Scholars

Author Richard P. Larrick Fuqua School of Business