psychology and economics – Positive Mental Health

Psychology and Economic Integration

wpx_beyondou — Tue, 26 Oct 2010 08:26:41 +0000

Economic Integration

Ishizuka, Nathalie, “Is GATT a ‘Good’ Psychiatrist?: Building a Multilateral Framework,” Fletcher School of Law and Diplomacy, Masters Thesis, December 1995. Comments by Arthur Dunkel, former Head of GATT (now WTO).

Editors and Journals

If an editor is interested in a chapter for book format, or journal form, please notify the author. If you have a syllabus with assumptions about healthy human beings applied to organizations, economics, negotiation, political science or other fields contact Nathalie Ishizuka through the Positive Mental Health Foundation contact form. She is interested in collecting these for future use and sharing.

For More on a Psychology of Health and Organizational, National or International Behavior See:

A Need for Models of Healthy Human Beings

Organizational and International behavior should be based on assumptions about healthy human beings. Read section a Science of Health (life way), Criteria for Health Models (science of happiness), Happiness Defined? Quantified? (cycle of life), Happier? (fear of the unknown), Why Positive Mental Health Works (objective subjective), and Insights (life purpose).

Visit http://www.PositiveMentalHealthFoundation.com to understand individuals at their best, happiest, and most creative form. Link to us to promote health and happiness.

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Individual Health, Organizational Health, National Health
Applications about healthy human beings to economics, international affairs, nations, organizational behavior. A new organizational behavior concept or simply a new field of international behavior based on healthy human beings?

Economics and Psychology : Oliver Williamson Assumption about Human Actors

wpx_beyondou — Fri, 22 Oct 2010 06:26:48 +0000

Applying an Assumption about Healthy Human Beings to Economics?

What are the basic assumptions about human beings in economics? Are these assumptions based on healthy human beings? If not, can they be fine-tuned?

Nathalie Ishizuka applies the assumption about human fear and how it affects optimal decision making to the 2009 Nobel laureate Olivier Williamson’s, Transaction Cost Economics.

Economics is Based on Simple Assumptions about Human Beings
Economic models are based on simple assumptions about human beings.

Whereas traditional economic man is considered as omniscient and able to take into account the consequences of all alternatives, transaction cost economics (TCE) incorporates an understanding about human beings or human costs that include Herbert Simon’s (Nobel Prize, 1978) cognitive assumption of “bounded rationality” (from the little we do know, we make the best decision), and Oliver Williamson’s (Nobel Prize, 2009) behavioral assumption of “opportunism” (suggesting that transactions and organizations benefit from safeguards and the aligning of incentives).

Adding an Assumption about Healthy Human Beings to Economics
The assumption by Simon and Williamson are useful to understanding economic costs. However, human beings do not only think (cognitive assumption of TCE economics) and act (behavioral assumption of TCE economics), but also feel. The question then becomes what emotion influences the make or buy decision?

Adding Affect: Fear
Based on her understanding of healthy human beings from Dr. Yukio Ishizuka‘s model of human personality, Nathalie Ishizuka adds a healthy assumption about human affect (fear) to the make or buy decision. According to Nathalie Ishizuka, the human affect fear implies we are not only “limited cognitively,” but even when we do know the best decision–due to fear–we may not always chose it.

Fear and other Economic Theories
Nathalie Ishizuka hopes that the assumption fear will be included in transaction cost economics (in Ishizuka’s viewpoint one of the most formidable paradigms in economics and organization). She also follows with interest the work of Agency Theory by Michael Jensen. While important work on fear in small decisions (gambling) in economics is notable, Ishizuka is not talking about risk aversion, but about how fear can lead us not to act optimally even when we know what is best for us. It is this type of fear that can place the economic system at risk. In the future Nathalie Ishizuka wishes to work on how fear varies, and identifying the factors that are responsible for this variation.

The ‘Psychological’ Make or Buy Decision,
Ishizuka, Nathalie, “The Psychological Make or Buy Decision: Psychology and Transaction Cost Economics,” paper presented at the Academy of Management, Boston, August 1997.

ABSTRACT
Transaction cost economics is integrated with cognitive and affective aspects of ownership and contract. Integrating these distinct streams of literature leads to a more comprehensive view of the “make or buy” decision, describing not only how individuals behave, but also how they think and feel within alternative exchange relationships.

EXCERPT

TRANSACTION COSTS ANALYTICAL ASSUMPTIONS
Transaction costs or the “costs of running the economic system” (Arrow, 1969: 48) are ultimately about human costs. Once one recognizes that firms are “legal fictions” that serve as a nexus of “contracting relationships among individuals,” (Jensen & Meckling, 1976: 311) then one must admit that transaction costs or agency costs are neither experienced by the market nor the firm in the abstract, but by individuals. The “friction in physical systems“ (Williamson, 1985: 19) that economists have baptized transaction costs are the equivalent of friction or stress created in the interaction of human beings with each other, with their environment and within themselves. In this sense, agency costs and transaction costs are very much the same. In a like manner, agency costs can be thought of as the equivalent of friction in “any situation involving cooperative effort by two or more people,” (Jensen and Meckling, 1976: 309) and can exist in the form of conflicts with oneself (Thaler and Shefrin, 1981).

Coase’s insights on individuals are consistent with this point. Coase tells us that the choice of markets versus firms to organize transactions is the result of, “man as he is, acting within the constraints imposed by real institutions” (Coase, 1984: 231). Williamson also concurs attributing transaction costs to “behavioral assumptions” of “bounded rationality” and “opportunism.” Although Williamson lumps these assumptions of “bounded rationality” and “opportunism” together as “behavioral assumptions,” or assumptions about how individuals act, bounded rationality is really a cognitive assumption or theory about the limits of the thought process. Opportunism, on the other hand, is a behavioral assumption about the way individuals behave.

Bounded Rationally: The Cognitive Assumption of Transaction Cost Analysis
The idea of bounded rationality comes from Simon, who argued that human beings are “intendedly rational, but only limitedly so” (Simon, 1976: xxviii). Whereas traditional economic man is considered as omniscient and able to take into account the consequences, probabilities and utilities of all alternatives, Simon argued that individuals are “limited in knowledge, foresight, skill and time” (Simon, 1957: 199). The cognitive abilities of individuals are “bounded” in that they can only take in and make sense of a limited amount of information. In terms of transaction cost analysis, cognitive limits have important implications for planning, adopting and monitoring exchange relationships. To the extent that internalization can serve to reduce uncertainty and complexity (Williamson, 1975), one can successfully reduce transaction costs and economize on bounded rationality (Chiles and McMackin, 1996) .

Opportunism: The Behavioral Assumption of Transaction Cost Analysis
Opportunism is the behavioral attribute that underlies transaction cost analysis. According to Williamson, opportunism is not just self-interested behavior, but “self-interest seeking with guile“ (Williamson, 1985: 47). Opportunism includes not only “subtle forms of deceit,” such as “incomplete or distorted disclosure of information, especially to calculated efforts to mislead, distort, disguise, obfuscate, or otherwise confuse,” but also overt “lying, stealing, and cheating” (Williamson, 1985: 47). This assumption about human beings is important because it suggests that transactions and organizations would benefit from safeguards and the aligning of incentives(Williamson, 1985: 48). Ghoshal and Moran (1996) have argued that this behavioral assumption of opportunism is an overly pessimistic view of human nature. They seem to have interpreted Williamson’s statement to mean that organizations exist solely because of their ability to attenuate opportunism through hierarchical control. This is not Williamson’s central point. Williamson is not assuming that all individuals act opportunistically, rather that without evidence to the contrary, the assumption of opportunism is reasonable. Naturally, “rules” or hierarchical organization can at times serve to limit opportunism, however, if humans have the capacity to be opportunistic then opportunism will continue to exist both in the market and within the firm. Williamson’s point then is not to remedy market failure with “benign forms of organization,” but rather to stress the importance of a comparative approach (Williamson, 1993a: 102). Ultimately, the existence and extent of opportunistic behavior by individuals and the degree to which it impacts internalization (Hill, 1990) is an empirical issue.

Affect: The Missing Assumption in Transaction Cost Analysis
Adherents to the transaction cost view accept the assumptions of bounded rationality and opportunism as descriptions of the way human beings think and act in make or buy decisions. These simple assumptions distinguish transaction cost economics from classical economics, which does not recognize the “psychological make-up” of individuals. Classical economics limits itself to the constraints that are external to the individual and to the organization, such as technology and the interests of individuals who depart from one’s own (Simon, 1957: 199). By embracing more realistic cognitive and behavioral assumptions about individuals, transaction cost economics provides strategic management with a perspective that connects the individual actor with its larger institutional structure.

What remains surprising, however, is that transaction cost economics has yet to make explicit affective assumptions about human actors that may influence the make or buy decision. Just as Simon and Williamson made assumptions about the cognitive and behavioral attributes of humans, a similar assumption should be made explicit regarding the affective capacities of individuals. While Williamson’s view on this issue has yet to be determined, Simon, himself, suggests that any mature social science “will have to come to accommodate both intellect and affect” (1957: 200).

End Note by Ishizuka:
“As they say in academia, all errors are mine. I do believe Oliver Williamson, given his openness and interdisciplinary scope will one day incorporate fear into TCE and that this will have fundamental implications on understanding the current financial crisis and lessening the impact of future ones. His framework is important because it is an integrated paradigm in economic organization. For fear to be included in such a paradigm, however, it is my turn to work, to get Dr. Yukio Ishizuka’s theory and understanding of fear known and accepted. In the future, I would like to work on how fear varies, and identify the factors that are responsible for this variation.”

— Nathalie Ishizuka

The paper was accepted for presentation at the Academy of Management, Boston, August 1997. To ask that the full article or parts be included in a journal or book, please contact the author through the Lifetrack Contact Form on this site.

If you have a syllabus with assumptions about healthy human beings applied to organizations, economics, negotiation, political science or other fields please contact Nathalie Ishizuka through the Positive Mental Health Foundation contact form. She is interested in collecting these for future use and sharing.

For More on Healthy Individuals and applications to Organizations, Nations, and International Behavior See:

Crisis Management & Diplomacy

Economic Integration

War, Crisis & Health

International Affairs

Econometric Modeling

Political Science

A Need for Models of Healthy Human Beings

Visit http://www.PositiveMentalHealthFoundation.com to understand individuals at their best, happiest, and most creative form. Link to us to promote health and happiness.

Ready Made Descriptions to Link to Organizational and International Behavior:

Applications of Psychology to Organizations, Nations, International Affairs

wpx_beyondou — Tue, 19 Oct 2010 07:32:27 +0000

Applications About Healthy Human Beings to Other Fields?

Behind Science, Simple Assumptions about the Nature of Human Beings

Behind every social science are some fundamental and simple assumptions about the nature of human beings and human personality. When models of science incorporate assumptions about humans in our optimal most creative form, we can understand better what we are truly capable of, as well as our limits. Models about healthy human beings can provide new insights into our organizations, and international affairs, forming not only a new individual science, but new organizational models, and a more comprehensive science of international behavior.

All Models of Man are Working Models in Progress

Some of the work on this site applies a healthy assumption about human beings to other fields (for example to the work of the 2009 Nobel Laureate in Economics). Other work attempts to bring to life conceptual models that can be used as a level of analysis (individual, organizational, national or international). At the core of such models are Lifetrack assumptions about healthy human beings.

Naturally, human beings are not organizations or nations. However, having models that can interact as systems allows us to understand how each unit of analysis influences and impacts the whole.

New Models Based on an Individual Model of Health

In the future, we would enjoy working on such models and applications further, but now our priority is to get one individual model of health and personality known and used on a wider scale by the general public.

Manage with an Understanding of Healthy Human Beings

We encourage politicians, CEOs, and scientists, to think about the assumptions about the nature of man or human personality that underlie a healthy nation, organization or any field of science.

We encourage academics to build models based on an understanding of healthy human beings or models of human personality that can explain man at his best, most creative form as well as in distress. These models should encompass our potential and our limits.

Enjoy Yourself, Join Us

Please join us by opting-in on the newsletter on the website.

Apply assumptions about healthy human beings to your firm, to science, to organizations, nations or international affairs. If you have a syllabus or other interesting links on the study of healthy human beings and applications to sciences, send it to Nathalie Ishizuka through the contact page. She will find a means to share some of these links, works, or articles on healthy human beings.

A Need for Models Based on Healthy Human Beings

Visit the Positive Mental Health Foundation to support a study of human beings at their best, happiest, and most creative form. Link to us to promote health and happiness.

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http://positivementalhealthfoundation.com/happiness-and-health/international-behavior/

Nathalie Ishizuka

wpx_beyondou — Mon, 11 Oct 2010 09:39:18 +0000

Nathalie Leiko Ishizuka enjoys thinking and writing about happy human beings, a science of health, criteria for health models, defining happiness, quantifying happiness, states of inner wellbeing, and the structure of healthy optimal human minds. She has applied Lifetrack assumptions about healthy human beings to a variety of disciplines including to the 2009 Nobel Laureate in Economics.

Nathalie has spent over 18 years of learning and writing about the mind and how Dr. Yukio Ishizuka‘s positive mental health approach (a Harvard trained Japanese psychiatrist and her father) transforms personality (see how Lifetrack works and insights on Life Purpose).

After working several years with Dr. Yukio Ishizuka, in 1995 her desire to extend assumptions about healthy human beings to other fields including economics, organizations and international affairs lead her to complete the Master’s program onLaw and Diplomacy, and an MBA.

As a graduate student, Nathalie Ishizuka applied the health concepts (called Lifetrack) to both the firm and the nation-state. A number of Harvard Business School students preferred Ishizuka’s application of Lifetrack concepts to the firm over the assigned reading of The Road Less Traveled. The Program on Negotiation at Harvard Law School published her working paper dealing with Lifetrack concepts and mediation. Ishizuka’s work on psychology and the GATT (now WTO) resulted in a correspondence with Arthur Dunkel, former head of the World Trade Organization. Her work, “Lessons from Preventive Health to Preventive Diplomacy,” received the attention of former U.N. Secretary General Boutros-Boutros Ghali and that of the office of Kofi Annan, winning also the Eisaku Sato Memorial Essay Award from the U.N. University in Tokyo.

Accepted in the Ph.D. program at Berkeley in Organizational Behavior and Industrial Relations, she told her professors at Fletcher she would go there to apply an assumption on healthy human beings to Oliver Williamson’s (recipient of 2009 Nobel Prize in Economics) theory of the firm.

It is at Berkeley that she met a new mentor, Dr. Len Duhl, who at the early age of twenty-one, headed Mental Health in the United States. In May of 1998, the School of Public Health, introducing her to work with the Menninger Foundation, proposed her name for an NIMH fellowship. “I greatly admire the Menninger brothers, and yet it was too early for such work,” said Ishizuka. “I came to apply a psychology based on healthy human beings to organizations and economics, but something was missing. I needed to test models through organizational experience, to go far beyond my conceptual knowledge.” Greatly admiring Oliver Williamson and Len Duhl, she agonized, but left academia, following the man she loved to Paris and picking up an MBA during her stay.

Enjoying work with innovative individuals, companies, entrepreneurs, engineers, and scientists, she founded a small innovative company to teach herself about promoting health through entertainment and technology. “The idea that inspired me is far too big for me,” says Ishizuka, “but, sometimes things don’t work out for a reason. Perhaps it will surface elsewhere.”

“I am not an expert in highly specialized fields, but when I lack the answers or the expertise, I am good at finding, meeting, and working with those who do,” says Ishizuka.

My mentors in many fields have taught me much about the human mind, about happiness and how to create innovation across disciplines. Technology is a tool, not an ends.

By helping individuals enjoy the process of their own creation, she believes she can create far more change than on her own.

Nathalie’s inter-disiplinary approach integrating the psychology of individuals, organizations, and the nation state has lead her to work with individuals from many fields and to receive the George A.Plimpton Fellowship for the study of social, economic and political institutions.

She has created the Positive Mental Health Foundation site to promote quality information on health, happiness and reduction of human suffering. While the focus of this site is on individual health, applications to other fields can be found in the sectionapplications of a psychology of health.

New Focus Japan Crisis

Her current focus is on the Japan crisis. (Nathalie), also called Leiko by her Japanese friends, is working on an article with, Dr. Paul Briot, Ph.D. in philosophy and a Belgian essayist, on using the crisis as an opportunity for positive change.

“I’ve met and worked with brilliant, talented, and profound people in all sectors, says Ishizuka, including my father. And yet, never an individual that has moved me to put all else aside and to focus. Never an individual as inter-disciplinary, modest, knowledgable and spiritual. Then again, the Japanese crisis may offer us one of the greatest challenges we have seen in a long time. And one of the greatest opportunities.”

Past academic interests include applying Lifetrack assumptions about the healthy mind to organizations, nations, Japan, economics, negotiation, crisis management & diplomacy,economic integration, war/crisis/health, international affairs, econometric modeling and the mind, and political science.

Attracted to life, to learning, and to pushing an understanding of the healthy mind further, she believes innovation comes from the cross-road of disciplines.

Nathalie Leiko Ishizuka is married to a French man (who like her mother has no need of theories on happiness), has two children and lives in Brussels, Belgium where she pursues her vocation of writing and teaching a psychology of health. She works with scientists, engineers and many others in a variety of fields.

Nathalie received her M.B.A. from Hautes Etudes Commerciales (HEC), M.A.L.D. from the Fletcher School of Law & Diplomacy (administered in cooperation with Harvard), and a B.A. Political Science, Phi Beta Kappa, summa cum laude, Amherst College. She participated in the winter Harvard Law Negotiation Program. She is a member of SCWBI and enjoys capturing movement in watercolor.

For an excerpt on applying an assumption about healthy human beings to the Nobel Laureate in Economics (2009) read Oliver Williamson’s theory of the firm.

For a lighter read, see her book OTHER based on Health and Happiness for children and parents who dare to be different www.natsays.com

Visit http://www.PositiveMentalHealthFoundation.com to understand individuals at their best, happiest, and most creative form. Link to us to promote health and happiness.

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Individuals, Organizations and the Nation State
Nathalie Ishizuka, a Fletcher School graduate, explores an inter-disciplinary approach to integrating the psychology of individuals, organizations, and the nation state.
http://positivementalhealthfoundation.com/about/nathalie-ishizuka/