Revisiting a Standard Theory of Cooperatives: A Behavioral Economics Perspectives

Abstract

The current economic understanding of the standard theory of cooperative organization is inclined towards neoclassical rational choice theory. While this is useful in predicting the behavior of individual under perfect information and less uncertain world, empirical evidence shows that, more often, decision-makers operate in a complex and uncertain environment, and the information available is far from perfect. This paper points out the existing limitations of the standard theory of cooperatives. It then proposes the behavioral rational choice model, which incorporates behavioral aspects into the standard neoclassical model. It concludes that this proposed model improves our insights and understanding of the behavior of cooperative organizations.

DOI: 10.5901/mjss.2014.v5n6p117