"But Can't we Get the Same Thing with a Standard Model?" Rationalizing Bounded-Rationality Models
AbstractThis paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be "rationalized" by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, the rationalizing models tend to come with unwarranted "extra baggage". I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of such models.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 21428.
Date of creation: 15 Mar 2010
Date of revision:
Bounded rationality; methodology; theory selection; rationalizations;
Other versions of this item:
- Spiegler, Ran, 2011. "‘But Can'T We Get The Same Thing With A Standard Model?’ Rationalizing Bounded-Rationality Models," Economics and Philosophy, Cambridge University Press, vol. 27(01), pages 23-43, March.
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-28 (All new papers)
- NEP-EVO-2010-03-28 (Evolutionary Economics)
- NEP-HPE-2010-03-28 (History & Philosophy of Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Bounded rationality or limited information?
by Economic Logician in Economic Logic on 2010-04-21 14:08:00
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