The development gap in economic rationality of future elites

Alexander Cappelen, Shachar Kariv, Erik Sørensen and Bertil Tungodden

Games and Economic Behavior, 2023, vol. 142, issue C, 866-878

Abstract: We test the touchstones of economic rationality—utility maximization, stochastic dominance, and expected-utility maximization—of elite students in the U.S. and in Africa. The choices of most students in both samples are generally rationalizable, but the U.S. students' scores are substantially higher. Nevertheless, the development gap in economic rationality in incentivized risk choices between these future elites is much smaller than the difference in performance on a non-incentivized canonical cognitive ability test, often used as a proxy for economic decision-making ability in studies of economic development and growth. We argue for the importance of including consistency with economic rationality in studies of decision-making ability.

Keywords: Rationality; Revealed preference; Stochastic dominance; Expected utility; Cognitive ability; Personality traits; Development; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 F61 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:142:y:2023:i:c:p:866-878

DOI: 10.1016/j.geb.2023.10.005

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