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Trade Bounded Rationality and Bounded Individuality

John Davis ()

No 2014-03, Working Papers and Research from Marquette University, Center for Global and Economic Studies and Department of Economics

Abstract: This paper argues that since the utility function conception of the individual is derived from standard rationality theory, the view that rationality is bounded suggests that individuality should also be seen as bounded. The meaning of this idea is developed in terms of two ways in which individuality can be said to be bounded, with one bound associated with Kahneman and Tversky's prospect theory and the "new" behavioral economics and a second bound associated with Simon's evolutionary thinking and the "old" behavioral economics. The paper then shows how different bounded individuality conceptions operate in nudge economics, agent-based modeling, and social identity theory, explaining these conceptions in terms of how they relate to these two behavioral economics views of bounded rationality. How both the "new" and "old" individuality bounds might then be combined in a single account is briefly explored in connection with Kirman's Marseille fish market analysis.

Keywords: bounded rationality; bounded individuality; nudge economics; agent-based modeling; social identity theory; Marseille fish market (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-hme, nep-hpe, nep-pke and nep-upt
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