Paradoxes versus formalism in economics. Evidence from the early years of game theory and experimental economics
AbstractThis paper argues that the acceptance of two recent methodological advances in economics, namely game theory and laboratory experimentation, was affected by the history dependence constraining the formalization of economics. After an early period in which the two methods were coolly received by economists because their applications challenged some basic hypotheses of mainstream economics, their subsequent acceptance was the result of the corroboration of those same hypotheses. However, the recent emergence of some paradoxes has finally revealed that the effectiveness of game theory and experimental techniques in economics is improved when descriptively implausible and normatively unsatisfactory assumptions such as the centrality of individual maximization in decision theory and the definition of rationality as consistency in preferences are revised.
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Bibliographic InfoPaper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 433.
Date of creation: Jul 2004
Date of revision:
paradoxes; game theory; experiments; individual maximization; economic rationality;
Find related papers by JEL classification:
- B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
- B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-02 (All new papers)
- NEP-CBE-2004-08-02 (Cognitive & Behavioural Economics)
- NEP-EVO-2004-08-02 (Evolutionary Economics)
- NEP-EXP-2004-08-02 (Experimental Economics)
- NEP-HIS-2004-08-02 (Business, Economic & Financial History)
- NEP-HPE-2004-08-02 (History & Philosophy of Economics)
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