How to cope with (new) uncertainties: A bounded rationality approach

Werner Güth () and Hartmut Kliemt

No 2015-46, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: A rigorous reconstruction of scenario-based real choice making reveals the incompleteness of decision-modeling and the practical prevalence of uncertainty. Theoretically complete models conceal it. As a remedy a scenario-based procedure of coping with uncertainty can prescribe how the boundedly rational decision-maker should proceed from her or his internal point of view. Though models of substantive rationality cannot serve as guidance for decision-making under uncertainty, we can improve prescriptions for coping with uncertainties in view of evidence of substantive success or failure. Decision theory should aim for a reflective equilibrium incorporating internalist-prescriptive and externalist-descriptive aspects to turn good into better practice.

Keywords: uncertainty; procedural rationality; satisficing; risk-communication (search for similar items in EconPapers)
JEL-codes: D01 D03 D21 D80 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cbe and nep-upt
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201546

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