How to Cope With (New) Uncertainties—A Bounded Rationality Approach

Werner Güth and Hartmut Kliemt ()
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Werner Güth: Luiss Guido Carli
Hartmut Kliemt: Justus Liebig University

Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2017, vol. 34, issue 4, No 6, 343-359

Abstract: Abstract Whenever certain axioms are fulfilled decision-making under uncertainty can be modeled as if maximizing the expected utility of results of risky choices over a known state space with non-ambiguous probability weights. As opposed to this, practically coping with ever new uncertainties—new in that statistical, empirical evidence is lacking—requires a purely procedural bounded rationality approach as paradigmatically proposed here. The procedures can be evaluated and improved in view of evidence of their “objective” success or failure whereas the prescription to behave as if maximizing a subjective utility function is of no direct technological use for a boundedly rational actor.

Keywords: Uncertainty; Procedural rationality; Satisficing; Risk-communication; D80; D01; D03; D21 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s41412-017-0057-0

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