Abstract: This paper used “practical reason” as a framework for understanding economic behaviors of human being. This position proposed that economic behavior would systemically depart from traditionally economic reason due to human limitations in perception and processing of thinking. This paper introduced Kahneman and Tversky’s main work from perspective of cognitive psychology, including well-known prospect theory, what were called heuristics and biases approach and relation between decision-making and emotion. Criticisms of Kahneman and Tversky’s work were presented in the finial section.

Key words: practical reason, behavioral economics, decision-making