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Generalization of results and neoclassical rationality: unresolved controversies of behavioural economics methodology

  • Robin MaialehEmail author
Article
  • 44 Downloads

Abstract

Many of behavioural economists have succumbed to misconception that economic models must be identified with observable reality. Therefore, behavioural approach enriches the sober neoclassical models with various psychological aspects of decision making in order to describe immediate reality more accurately. However, in contrast to natural sciences, social sciences aim at variance-based phenomena and thus the trade-off between theoretical objectiveness and empirical particularity remains. Behavioural insights are then at risk of being a mere fragmented empirical “evidence” of psychological descriptivism, which in combination with typical value neutrality should keep us vigilant about application in public policy. Secondly, the paper provides a progressive reading of rationality through a neoclassical lens. It is argued that rationality of a typical Bayesian decision-maker is immune to most of behavioural critique. It is shown on various examples that central behavioural concepts like satisficing behaviour or prospect theory cannot fundamentally challenge pillars of the neoclassical framework.

Keywords

Behavioural economics methodology Results generalization Neoclassical rationality Cognitive limitations Consistency of choice Utility maximisation 

JEL Classification

B13 B40 C90 D90 

Notes

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© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Masaryk Institute of Advanced StudiesCzech Technical University in PraguePrague 6Czech Republic

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