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‘BUT CAN'T WE GET THE SAME THING WITH A STANDARD MODEL?’ RATIONALIZING BOUNDED-RATIONALITY MODELS

‘BUT CAN'T WE GET THE SAME THING WITH A STANDARD MODEL?’ RATIONALIZING BOUNDED-RATIONALITY... This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be ‘rationalized’ by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, rationalizing models tend to come with unwarranted ‘extra baggage’. I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of bounded-rationality models. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics & Philosophy Cambridge University Press

‘BUT CAN'T WE GET THE SAME THING WITH A STANDARD MODEL?’ RATIONALIZING BOUNDED-RATIONALITY MODELS

Economics & Philosophy , Volume 27 (1): 21 – Mar 1, 2011

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References (15)

Publisher
Cambridge University Press
Copyright
Copyright © Cambridge University Press 2011
ISSN
1474-0028
eISSN
0266-2671
DOI
10.1017/S0266267110000453
Publisher site
See Article on Publisher Site

Abstract

This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be ‘rationalized’ by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, rationalizing models tend to come with unwarranted ‘extra baggage’. I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of bounded-rationality models.

Journal

Economics & PhilosophyCambridge University Press

Published: Mar 1, 2011

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