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‘But Can'T We Get The Same Thing With A Standard Model?’ Rationalizing Bounded-Rationality Models

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  • Spiegler, Ran

Abstract

This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be ‘rationalized’ by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, rationalizing models tend to come with unwarranted ‘extra baggage’. I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of bounded-rationality models.

Suggested Citation

  • Spiegler, Ran, 2011. "‘But Can'T We Get The Same Thing With A Standard Model?’ Rationalizing Bounded-Rationality Models," Economics and Philosophy, Cambridge University Press, vol. 27(1), pages 23-43, March.
    • Handle: RePEc:cup:ecnphi:v:27:y:2011:i:01:p:23-43_00
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    References listed on IDEAS

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    1. Bounded rationality or limited information?
      by Economic Logician in Economic Logic on 2010-04-21 19:08:00

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    Cited by:

    1. Michael D. Grubb, 2015. "Overconfident Consumers in the Marketplace," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 9-36, Fall.
    2. Szech, Nora, 2011. "Becoming a bad doctor," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 244-257.

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other

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