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Trade Bounded Rationality and Bounded Individuality

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  • Davis, John

    (Department of Economics Marquette University)

Abstract

This paper argues that since the utility function conception of the individual is derived from standard rationality theory, the view that rationality is bounded suggests that individuality should also be seen as bounded. The meaning of this idea is developed in terms of two ways in which individuality can be said to be bounded, with one bound associated with Kahneman and Tversky's prospect theory and the "new" behavioral economics and a second bound associated with Simon's evolutionary thinking and the "old" behavioral economics. The paper then shows how different bounded individuality conceptions operate in nudge economics, agent-based modeling, and social identity theory, explaining these conceptions in terms of how they relate to these two behavioral economics views of bounded rationality. How both the "new" and "old" individuality bounds might then be combined in a single account is briefly explored in connection with Kirman's Marseille fish market analysis.

Suggested Citation

  • Davis, John, 2014. "Trade Bounded Rationality and Bounded Individuality," Working Papers and Research 2014-03, Marquette University, Center for Global and Economic Studies and Department of Economics.
    • Handle: RePEc:mrq:wpaper:2014-03
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    File URL: http://epublications.marquette.edu/econ_workingpapers/35
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    Cited by:

    1. Malte F. Dold, 2018. "Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(2), pages 160-178, April.
    2. Christian Schubert, 2015. "On the ethics of public nudging: Autonomy and Agency," MAGKS Papers on Economics 201533, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    bounded rationality; bounded individuality; nudge economics; agent-based modeling; social identity theory; Marseille fish market;
    All these keywords.

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