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Bounded-Rationality Models: Tasks to Become Intellectually Competitive

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  • Ronald M. Harstad
  • Reinhard Selten

Abstract

Research in experimental economics has cogently challenged the fundamental precept of neoclassical economics that economic agents optimize. The last two decades have seen elaboration of boundedly rational models that try to move away from the optimization approach, in ways consistent with experimental findings. Nonetheless, the collection of alternative models has made little headway supplanting the dominant paradigm. We delineate key ways in which neoclassical microeconomics holds continuing and compelling advantages over bounded-rationality models, and suggest, via a few examples, the sorts of further, difficult pushes that would be needed to redress this state of affairs. Closer collaboration between theoretic modeling and experiments is clearly seen to be necessary.

Suggested Citation

  • Ronald M. Harstad & Reinhard Selten, 2013. "Bounded-Rationality Models: Tasks to Become Intellectually Competitive," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 496-511, June.
  • Handle: RePEc:aea:jeclit:v:51:y:2013:i:2:p:496-511
    Note: DOI: 10.1257/jel.51.2.496
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    References listed on IDEAS

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    1. repec:nea:journl:y:2017:i:34:p:181-189 is not listed on IDEAS
    2. Nax, Heinrich H. & Burton-Chellew, Maxwell N. & West, Stuart A. & Young, H. Peyton, 2016. "Learning in a black box," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 1-15.
    3. repec:ers:journl:v:xx:y:2017:i:3b:p:350-365 is not listed on IDEAS
    4. Fabrizio Germano & Peio Zuazo-Garin, 2017. "Bounded rationality and correlated equilibria," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(3), pages 595-629, August.
    5. repec:ers:journl:v:xx:y:2017:i:3a:p:370-385 is not listed on IDEAS
    6. Jean-François Laslier & Bernard Walliser, 2015. "Stubborn learning," Theory and Decision, Springer, vol. 79(1), pages 51-93, July.
    7. Philipp Lergetporer & Guido Schwerdt & Katharina Werner & Ludger Wößmann, 2016. "Information and Preferences for Public Spending: Evidence from Representative Survey Experiments," CESifo Working Paper Series 5938, CESifo Group Munich.
    8. Mike Farjam, 2015. "On whom would I want to depend; Humans or nature?," Jena Economic Research Papers 2015-019, Friedrich-Schiller-University Jena.
    9. Klaus Wälde, 2016. "Emotion Research in Economics," Working Papers 1611, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    10. V. P. Crawford., 2014. "Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    11. Klaus Wälde, "undated". "Stress and Coping - An Economic Approach," Working Papers 1514, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    12. Lunn, Pete & Somerville, Jason J., 2015. "Surplus Identification with Non-Linear Returns," Papers WP522, Economic and Social Research Institute (ESRI).
    13. Navarro-Martinez, Daniel & Loomes, Graham & Isoni, Andrea & Butler, David & Alaoui, Larbi, 2017. "Boundedly Rational Expected Utility Theory," MPRA Paper 79893, University Library of Munich, Germany.
    14. Paul Pezanis-Christou & Hang Wu, 2017. "A Naïve Approach to Bidding," School of Economics Working Papers 2017-03, University of Adelaide, School of Economics.
    15. Paul Ormerod, 2016. "Picking Up the Gauntlet: Richard Thaler's Defence of Behavioural Economics," Economic Affairs, Wiley Blackwell, vol. 36(1), pages 91-101, February.
    16. Guido Baldi, 2014. "Endogenous preference formation on macroeconomic issues: the role of individuality and social conformity," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 13(1), pages 49-58, June.
    17. repec:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-016-0110-3 is not listed on IDEAS
    18. Harstad, Ronald M. & Selten, Reinhard, 2016. "Diminished-dimensional political economy," European Economic Review, Elsevier, vol. 83(C), pages 213-219.
    19. Nax, Heinrich H. & Burton-Chellew, Maxwell N. & West, Stuart A. & Young, H. Peyton, 2016. "Learning in a black box," LSE Research Online Documents on Economics 68714, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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