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Rationality in Economics: Theory and Evidence

Author

Listed:
  • Sanjit Dhami
  • Ali al-Nowaihi

Abstract

We examine the various senses in which economist use the term “rationality” and then outline some of the commonly drawn implications and auxiliary assumptions. Finally, we confront the implications with the empirical evidence, drawing on the insights from the exciting new field of behavioral economics.

Suggested Citation

  • Sanjit Dhami & Ali al-Nowaihi, 2018. "Rationality in Economics: Theory and Evidence," CESifo Working Paper Series 6872, CESifo.
    • Handle: RePEc:ces:ceswps:_6872
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    References listed on IDEAS

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    5. Herbert Simon, 2000. "Bounded rationality in social science: Today and tomorrow," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 1(1), pages 25-39, March.
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    Cited by:

    1. Sanjit Dhami & Ali al-Nowaihi & Cass R. Sunstein, 2019. "Heuristics and Public Policy: Decision-making Under Bounded Rationality," Studies in Microeconomics, , vol. 7(1), pages 7-58, June.

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    More about this item

    Keywords

    rationality; self-regarding preferences; efficient markets; heuristics; optimization;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General

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