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

Ran Spiegler ()

Economics and Philosophy, 2011, vol. 27, issue 1, 23-43

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.

Date: 2011
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Working Paper: "But Can't we Get the Same Thing with a Standard Model?" Rationalizing Bounded-Rationality Models (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:ecnphi:v:27:y:2011:i:01:p:23-43_00

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