Economics at your fingertips  

Coping with unpleasant surprises in a complex world: Is rational choice possible in a world with positive information costs?

Roger Congleton ()

No 6/2011, CIW Discussion Papers from University of Münster, Center for Interdisciplinary Economics (CIW)

Abstract: This paper provides a rational choice-based analysis of the causes and consequences of surprise events. The paper argues that ignorance may be rational, but nonetheless produce systematic mistakes, inconsistent behavior, and both pleasant and unpleasant surprises. If ignorance and unpleasant surprises are commonplace and relevant for individual and group decisionmaking, we should observe standing institutions for dealing with them - and we do. Insofar as surprises are consistent with rational choice models, but left outside most models, it can be argued that these methodological choices mistakenly limit the scope of rational choicebased research.

Keywords: Ignorance; Rational Ignorance; Natural Ignorance; Bounded Rationality; Rational Choice; Biased Expectations; Crisis Management; Social Insurance; Bailouts; Economics of Information (search for similar items in EconPapers)
JEL-codes: D8 D6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-ias, nep-mic, nep-neu and nep-upt
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in CIW Discussion Papers from University of Münster, Center for Interdisciplinary Economics (CIW) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

Page updated 2019-04-06
Handle: RePEc:zbw:ciwdps:62011