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The logic of normative falsification: rationality and experiments in decision theory

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  • Francesco Guala

Abstract

The paper investigates how normative considerations influenced the development of the theory of individual decision-making under risk. In the first part, the debate between Maurice Allais and the 'Neo-Bernoullians' (supporting the Expected Utility model) is reconstructed, in order to show that a controversy on the definition of rational decision and on the methodology of normative justification played a crucial role in legitimizing the Allais-paradox as genuinely refuting evidence. In the second part, it is shown how informal notions of rationality were among the tacit heuristic principles that led to the discovery of generalized models of decision put forward in the early eighties to replace the received model.

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  • Francesco Guala, 2001. "The logic of normative falsification: rationality and experiments in decision theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 7(1), pages 59-93.
    • Handle: RePEc:taf:jecmet:v:7:y:2001:i:1:p:59-93
    DOI: 10.1080/135017800362248
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    References listed on IDEAS

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    1. Guala, Francesco, 2000. "Artefacts in experimental economics: preference reversals and the Becker–DeGroot–Marschak mechanism," Economics and Philosophy, Cambridge University Press, vol. 16(1), pages 47-75, April.
    2. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, December.
    3. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230, December.
    4. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    5. Ramsey, Frank P., 1926. "Truth and Probability," Histoy of Economic Thought Chapters, in: Braithwaite, R. B. (ed.),The Foundations of Mathematics and other Logical Essays, chapter 7, pages 156-198, McMaster University Archive for the History of Economic Thought.
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    Cited by:

    1. Sophie Jallais & Pierre-Charles Pradier & David Teira, 2008. "Facts, Norms and Expected Utility Functions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00274361, HAL.
    2. Boris Salazar, 2004. "Nash y von Neumann: mundos posibles y juegos de lenguaje," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 6(10), pages 71-94, January-J.

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