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The consistency and ecological rationality approaches to normative bounded rationality

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  • Nathan Berg

Abstract

This paper focuses on tacit versus explicit uses of plural performance metrics as a primary methodological characteristic. This characteristic usefully distinguishes two schools of normative analysis and their approaches to normative interpretations of bounded rationality. Both schools of thought make normative claims about bounded rationality by comparing the performance of decision procedures using more than one performance metric. The consistency school makes tacit reference to performance metrics outside its primary axiomatic framework, but lexicographically promotes internal axiomatic consistency as the primary, and in most cases sufficient, normative outcome with which to undertake welfare comparisons. The consistency school's axiomatization program, in both neoclassical and behavioral forms, pre-commits to welfare interpretations that follow a hierarchy of rationalities based on the stringency of restrictions that different axiomatizations impose on choice data. In contrast, the ecological rationality school explicitly adopts multiple, domain-specific performance metrics, reflecting the view that adequate descriptions of well-being are irreducibly multivariate (i.e., non-scalar).

Suggested Citation

  • Nathan Berg, 2014. "The consistency and ecological rationality approaches to normative bounded rationality," Journal of Economic Methodology, Taylor & Francis Journals, vol. 21(4), pages 375-395, December.
  • Handle: RePEc:taf:jecmet:v:21:y:2014:i:4:p:375-395
    DOI: 10.1080/1350178X.2014.969910
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    Cited by:

    1. Malte F. Dold, 2018. "Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(2), pages 160-178, April.
    2. Alexandre Truc, 2022. "The Disciplinary Mobility of Core Behavioral Economists," GREDEG Working Papers 2022-27, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    3. Christian Schubert, 2015. "On the ethics of public nudging: Autonomy and Agency," MAGKS Papers on Economics 201533, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Inaki Aliende & Lorenzo Escot, 2022. "Why Policymakers and Social Scientists Should Adopt Behavioral Economics: An Analysis for the Period 2000-2020," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 14(2), pages 453-487, June.
    5. Berg, Nathan & Prakhya, Srinivas & Ranganathan, Kavitha, 2018. "A satisficing approach to eliciting risk preferences," Journal of Business Research, Elsevier, vol. 82(C), pages 127-140.
    6. Ivan Moscati, 2022. "Behavioral and heuristic models are as-if models too — and that’s ok," BAFFI CAREFIN Working Papers 22177, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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