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The government economic agenda in a society of unequally rational individuals

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  • Pelikan, Pavel

Abstract

What economic roles, if any, should government play? This is still an incompletely analyzed issue that different individuals – depending on their ideologies, rent-seeking opportunities, and analytical abilities – may answer very differently. To advance its analysis, this paper recognizes that human rationality (as empirically testable cognitive abilities) is bounded unequally across individuals, and is therefore a unique scarce resource that markets and government allocate in significantly different ways. The results conflict with ideologies of both socialism and classical liberalism, but agree with two puzzles of recent economic history and with ideological compromises in actual economic policies.

Suggested Citation

  • Pelikan, Pavel, 2008. "The government economic agenda in a society of unequally rational individuals," MPRA Paper 19127, University Library of Munich, Germany, revised 06 Dec 2009.
  • Handle: RePEc:pra:mprapa:19127
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    File URL: https://mpra.ub.uni-muenchen.de/19127/1/MPRA_paper_19127.pdf
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    References listed on IDEAS

    as
    1. Frey, Bruno S. & Eichenberger, Reiner, 1994. "Economic incentives transform psychological anomalies," Journal of Economic Behavior & Organization, Elsevier, vol. 23(2), pages 215-234, March.
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    More about this item

    Keywords

    unequally bounded rationality; rationality-allocation; markets; government; economic policies;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • I0 - Health, Education, and Welfare - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • A10 - General Economics and Teaching - - General Economics - - - General

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