On the Obsolescence of Long-Run Rationality

The rapid pace of technological change challenges assumptions concerning the economic “long-run†. Consequentially, it disrupts the optimal psychological balance of emotion, reason, intuition and faith in our decision making. This is described in terms of the microeconomic conception of “runs†, decision frames defined by the scope of what is variable in the production process and endogenously determined. The four types are: market period, short, long and very long. These relate to time horizons that have parallels in terms of mindsets and the production of experiences. We show how a decrease in time between tech advances causes a sublimation from the short-run to the very long-run, thereby making long-run analysis obsolete. Further, these changes are associated with increased uncertainty about the future that is associated with increasing myopia. This can trigger a substitution out of reason into either emotion-based and/or intuition-based choice, as well as a greater demand on faith to maintain behavior. The implication is an exaggerated bifurcation in society between people driven by emotions to mediate the moment, and those reliant on vision and faith in technological progress to make their plans seem reasonable.