IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/19127.html
   My bibliography  Save this paper

The government economic agenda in a society of unequally rational individuals

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/19127/1/MPRA_paper_19127.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    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.
    2. repec:hhs:iuiwop:510 is not listed on IDEAS
    3. Viktor Vanberg, 2004. "The rationality postulate in economics: its ambiguity, its deficiency and its evolutionary alternative," Journal of Economic Methodology, Taylor & Francis Journals, vol. 11(1), pages 1-29.
    4. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    5. James M. Buchanan, 1954. "Social Choice, Democracy, and Free Markets," Journal of Political Economy, University of Chicago Press, vol. 62(2), pages 114-114.
    6. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    7. Glaeser, Edward L., 2006. "Paternalism and Psychology," Working Paper Series rwp06-006, Harvard University, John F. Kennedy School of Government.
    8. Bruno Frey, 1990. "From paradoxes to social rules, or: How economics repeats itself," Constitutional Political Economy, Springer, vol. 1(2), pages 27-34, March.
    9. Scott Beaulier & Bryan Caplan, 2007. "Behavioral Economics and Perverse Effects of the Welfare State," Kyklos, Wiley Blackwell, vol. 60(4), pages 485-507, November.
    10. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
    11. Bryan Caplan, 2001. "Rational Ignorance versus Rational Irrationality," Kyklos, Wiley Blackwell, vol. 54(1), pages 3-26, February.
    12. Pelikan, Pavel, 1997. "Allocation of Economic Competence in Teams: A Comparative Institutional Analysis," Working Paper Series 480, Research Institute of Industrial Economics.
    13. Roemer, John E., 1987. "Egalitarianism, Responsibility, and Information," Economics and Philosophy, Cambridge University Press, vol. 3(2), pages 215-244, October.
    14. Richard H. Thaler & Cass R. Sunstein, 2023. "Libertarian paternalism," Chapters, in: Cass R. Sunstein & Lucia A. Reisch (ed.), Research Handbook on Nudges and Society, chapter 1, pages 10-16, Edward Elgar Publishing.
    15. repec:hhs:iuiwop:480 is not listed on IDEAS
    16. Boland, Lawrence A, 1981. "On the Futility of Criticizing the Neoclassical Maximization Hypothesis," American Economic Review, American Economic Association, vol. 71(5), pages 1031-1036, December.
    17. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    18. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pavel Pelikán, 2010. "The Government Economic Agenda in a Society of Unequally Rational Individuals," Kyklos, Wiley Blackwell, vol. 63(2), pages 231-255, May.
    2. Pelikan, Pavel, 2006. "Markets vs. Government when Rationality Is Unequally Bounded: Some Consequences of Cognitive Inequalities for Theory and Policy," Ratio Working Papers 85, The Ratio Institute, revised 03 Sep 2006.
    3. Pelikan, Pavel, 2006. "Markets vs. Government when Rationality is Unequally Bounded: Some Consequences of Cognitive Inequalities for Theory and Policy," Freiburg Discussion Papers on Constitutional Economics 06/5, Walter Eucken Institut e.V..
    4. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    5. Gebhard Kirchgässner, 2013. "The Weak Rationality Principle in Economics," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 149(I), pages 1-26, March.
    6. Pelikan, Pavel, 1988. "Economic Competence as a Scarce Resource: An Essay on the Limits of Neoclassical Economics and the Need for an Evolutionary Theory," Working Paper Series 191, Research Institute of Industrial Economics.
    7. Schnellenbach, Jan & Schubert, Christian, 2014. "Behavioral public choice: A survey," Freiburg Discussion Papers on Constitutional Economics 14/03, Walter Eucken Institut e.V..
    8. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
    9. Niclas Berggren, 2012. "Time for behavioral political economy? An analysis of articles in behavioral economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 25(3), pages 199-221, September.
    10. Fritz W. Scharpf, 1991. "Games Real Actors Could Play: The Challenge of Complexity," Journal of Theoretical Politics, , vol. 3(3), pages 277-304, July.
    11. Jan Schnellenbach, 2016. "A Constitutional Economics Perspective on Soft Paternalism," Kyklos, Wiley Blackwell, vol. 69(1), pages 135-156, February.
    12. Schubert, Christian, 2017. "Green nudges: Do they work? Are they ethical?," Ecological Economics, Elsevier, vol. 132(C), pages 329-342.
    13. Li, Cheng, 2014. "Rationality and Beyond: A Critique of the Nature and Task of Economics," MPRA Paper 56651, University Library of Munich, Germany.
    14. Ronald Schettkat, 2018. "The Behavioral Economics of John Maynard Keynes," Schumpeter Discussion Papers sdp18007, Universitätsbibliothek Wuppertal, University Library.
    15. Cerulli Giovanni, 2005. "Ottimizzazione versus Razionalità Procedurale: un'analisi del dibattito sulla natura della scelta razionale in economia," CESMEP Working Papers 200501, University of Turin.
    16. Sanjit Dhami & Ali al-Nowaihi & Cass R. Sunstein, 2019. "Heuristics and Public Policy: Decision-making Under Bounded Rationality," Studies in Microeconomics, , vol. 7(1), pages 7-58, June.
    17. Nawrocki, David N., 1995. "Expectations, technological change, information and the theory of financial markets," International Review of Financial Analysis, Elsevier, vol. 4(2-3), pages 85-105.
    18. Рубинштейн Александр Яковлевич, "undated". "Рациональность & Иррациональность: Эволюция Смыслов [Rationality & Irrationality: Evolution of the Senses]," Working papers a:pru175:ye:2017:1, Institute of Economics.
    19. Bernd Lahno, 2007. "Rational Choice and Rule-Following Behavior," Rationality and Society, , vol. 19(4), pages 425-450, November.
    20. Pasche, Markus, 2014. "Soft Paternalism and Nudging - Critique of the Behavioral Foundations," MPRA Paper 61140, University Library of Munich, Germany.

    More about this item

    Keywords

    unequally bounded rationality; rationality-allocation; markets; government; economic policies;
    All these keywords.

    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 - Political Economy and Comparative 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:19127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.