Re: [Pen-l] Behavioral Economics [was: methodological individualism & schools]

[Jim Devine <jdevine03@xxxxxxxxx>]

michael perelman quoted:
> The Economist in 2006.
>
> "Behavioural economics ... is best understood as a set of exceptions that
> modifies but leaves intact the canonical model of rational choice, not least
> since it is irrational to suppose that people in general behave
> irrationally."

it does depend on what one means by "rational." The usual definition
is well-nigh tautological: it basically means consistent goal-seeking
with goals being given. (It's not truly tautological in that some of
us have conflicting goals.) So behavioral economics is just a gloss on
rationality: we're trying to be rational but we don't always do a good
job at it because we have incomplete information which is costly to
process and understand. So we end up being satisficers instead of
maximizers. Whether that's a big thing or not is a matter of opinion.

On the other hand, if "rational" involves individualism, then
behavioral economics gets beyond that. Some experimenters have found
that individuals in general have (and act on) standards of fairness.
By its very nature, since it involves interpersonal relations,
"fairness" gets beyond individualism.

That said, the experimenters are in general wedded to talking about
individuals and ignoring social institutions.
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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