Rationality, learning and complexity: from the Homo economicus to the Homo sapiens

  • A. Vercelli
Chapter
Part of the New Economic Windows book series (NEW)

Abstract

Standard economics is based on methodological individualism but this does not imply that the individuals play a crucial role in its models. On the contrary, in such a theory the individual is deprived of authentic subjective characteristics and plays no sizeable role as genuine subject. The so called Homo economicus is just a signpost for given preferences that, however, are generally conceived as exogenous and invariant through time. Therefore, the genuine psychological features of the economic agent do not matter.

Keywords

Decision Theory Rational Expectation Economic Agent Perfect Foresight Methodological Individualism 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Albin, P. (2001): Barriers and Bounds to Rationality: Essays on Economic Complexity and Dynamics in Interactive Systems, Princeton University Press, Princeton.Google Scholar
  2. Anscombe and Aumann, (1963): A definition of Subjective Probability, Annals of Mathematical Statistics, 34, pp.199–205.MathSciNetCrossRefGoogle Scholar
  3. Arrow, K.J., (1953): Le rôle des valeurs boursières pour la répartition la meilleure des riskes, Econométrie, vol.11, pp.41–48MathSciNetGoogle Scholar
  4. Arrow, K.J., and Debreu, G., (1954): Existence of an equilibrium for a competitive economy, Econometrica, 26, pp.265–90.CrossRefMathSciNetGoogle Scholar
  5. Arrow, K.J., and Hahn, F. H., (1971): Competitive General Equilibrium Analysis, Holden-Day, San Francisco.Google Scholar
  6. Basili, M., and A. Vercelli, (1998): Environmental option values, uncertainty aversion and learning, in G. Chichilnisky, G. Heal, and A. Vercelli, eds., Sustainability: Dynamics and Uncertainty, Martin Kluwer, Amsterdam.Google Scholar
  7. Begg, D.K.H., (1982): The Rational Expectations Revolution in Macroeconomics, Allan, Oxford.Google Scholar
  8. Binmore K.G., (1986): Remodelled rational players, Discussion Paper, London School of Economics, London.Google Scholar
  9. Bray, M., (1982): Learning, Estimation, and the Stability of Rational Expectations Equilibria, Journal of Economic Theory, 26, pp. 313–317.MATHCrossRefMathSciNetGoogle Scholar
  10. Bray, M, and N.E. Savin, (1986): Rational Expectations Equilibria, Learning and Model Specification, Econometrica, 54, pp.1129–60.MATHCrossRefMathSciNetGoogle Scholar
  11. Cagan, P., (1956): The Monetary Dynamics of Hyperinflation, in Studies in the Quantity Theory of Money, Aldine, Chicago.Google Scholar
  12. Choquet, G., (1955): Theory of Capacities, Annales de l’Institut Fourier, 5, pp.131–295.MathSciNetGoogle Scholar
  13. DeCanio, S.J., (1979): Rational Expectations and Learning from Experience, Quarterly Journal of Economics, 93, pp.47–58.CrossRefGoogle Scholar
  14. Debreu, G, (1959): Theory of value: An Axiomatic Analysis of Economic Equilibrium, Cowles Foundation Monograph no. 17, New Haven, Conn.: Yale University PressMATHGoogle Scholar
  15. De Finetti B., (1937): La Prévision: Ses Lois Logiques, Ses Sources Subjectives, Annales de l’Institute Henry Poincaré, 7, pp.1–68. English translation: Foresight: Its Logical Laws, Its Subjective Sources, in H.E. Kyburg and H.E. Smokler, eds., 1964, Studies in Subjective Probabilities, New York, Wiley, pp.93–158.MATHGoogle Scholar
  16. Dow, J., and Werlang, S.R.C., (1992a): Excess volatility of stock prices and Knightian uncertainty, European Economic Review, 36, pp.631–638.CrossRefGoogle Scholar
  17. Dow, J., and Werlang, S.R.C., (1992b): Uncertainty aversion, risk aversion, and the optimal choice of portfolio, Econometrica, 60, pp.197–204.MATHCrossRefGoogle Scholar
  18. Ellsberg, D., (1961): Risk, ambiguity, and the Savage axioms, Quarterly Journal of Economics, 75, pp.643–669.CrossRefGoogle Scholar
  19. Epstein, L., and Le Breton, (1993): Dynamically Consistent Beliefs Must Be Bayesian, Journal of Economic Theory, 61, pp.1–22.MATHCrossRefMathSciNetGoogle Scholar
  20. Evans, G.W., (1983): The Stability of Rational Expectations in Macroeconomic Models, in R. Frydman, and E.S. Phelps, eds., Individual Forecasting and Aggregate Outcomes. ‘Rational’ Expectations Examined, Cambridge University Press, Cambridge.Google Scholar
  21. Evans, G.W., and S. Honkapohja, (1990): Learning, convergence, and stability with multiple rational expectations equilibria, STICERD Discussion Paper, London.Google Scholar
  22. Foley, D.K., (2001): Introduction to Albin, 2001, pp.3–72Google Scholar
  23. Fourgeaud, C., C. Gourieroux, J. Pradel, 1986, Learning Procedure and Convergence to Rationality, Econometrica, 54, pp.845–68.MATHCrossRefMathSciNetGoogle Scholar
  24. Gadamer, H.-G., (1960): Wahrheit und Methode, Tubingen (English translation: Truth and Method, Sheeed and Ward ltd., New York, 1989.)Google Scholar
  25. Gärdenfors P., and Sahlin N.-E., (1982): Unreliable Probabilities, Risk Taking, and Decision Making, Synthèse, 53, pp.361–386.MATHCrossRefGoogle Scholar
  26. Ghirardato, P., (1994): Coping with Ignorance: Unforeseen Contingencies and Non-additive Uncertainty, Discussion Paper, Department of Economics, Berkeley.Google Scholar
  27. Gilboa, I., (1987): Expected Utility with Purely Subjective Non-Additive Probabilities, Journal of Mathematical Economics, 16, pp.65–68.MATHCrossRefMathSciNetGoogle Scholar
  28. Gilboa, I., (1989): Additivizations of Nonadditive Measures, Mathematics of Operation Research, 4, pp.1–17.MathSciNetCrossRefGoogle Scholar
  29. Gilboa, I., and Schmeidler D., (1989): Maximin expected utility with a non-unique prior, Journal of Mathematical Economics 18, pp.141–53.MATHCrossRefMathSciNetGoogle Scholar
  30. Gilboa, I., and Schmeidler D., (1993): Updating Ambiguous Beliefs, Journal of Economic Theory, 59, pp.33–49.MATHCrossRefMathSciNetGoogle Scholar
  31. Ingrao, B, and Israel, G, (1990): The Invisible Hand: Economic Equilibrium in the History of Science, Cambridge, Mass.: MIT Press.MATHGoogle Scholar
  32. Jones, R., and J. Ostroy, (1984): Flexibility and Uncertainty, Review of Economic Studies, 51, pp.13–32.MATHCrossRefGoogle Scholar
  33. Kelsey D., and Quiggin J., (1992): Theories of choice under ignorance and uncertainty, Journal of Economic Surveys, vol.6, n.2, pp.133–153.CrossRefGoogle Scholar
  34. Keynes, J.M., (1936): The General Theory of Employment, Interest and Money, London, Macmillan (C W VII: The Collected Writings of John Maynard Keynes, vol. VII, London: Macmillan, 1973).Google Scholar
  35. Kreps, D.M., (1988): Notes on the Theory of Choice, Boulder, Westview Press.Google Scholar
  36. Kurz M., (1991a): On rational belief equilibria, Discussion Paper, Stanford University.Google Scholar
  37. Kurz M., (1991b): On the Structure and Diversity of Rational Beliefs, Discussion Paper, Stanford University.Google Scholar
  38. Kurz M., (1993): Rational preferences and rational beliefs, manuscript.Google Scholar
  39. Lucas Jr., R.E., (1978): Asset Prices in an Exchange Economy, Econometrica, 46, pp.1429–45.MATHCrossRefMathSciNetGoogle Scholar
  40. Lucas Jr., R.E., (1986): Adaptive Behavior and Economic Theory, Journal of Business, 59, Supplement, pp.5401–26.Google Scholar
  41. Machina, M.J., and D. Schmeidler, 1992, A More Robust Definition of Subjective Probability, Econometrica, 60(4), 745–780.MATHCrossRefMathSciNetGoogle Scholar
  42. Mas-Colell, A., Whinston, M.D., and J.R. Green, (1995): Microeconomic Theory, Oxford University Press, New York.Google Scholar
  43. Marcet, A., and T.J. Sargent, (1988): The Fate of Systems with ‘Adaptive’ Expectations, American Economic Review,_Papers and Proceedings, 78, pp. 168–172.Google Scholar
  44. Marcet, A., and T.J. Sargent, (1989a) Convergence of Least Squares Learning Mechanisms in Self-Referential Stochastic Models, Journal of Economic Theory, 48, pp.337–368.MATHCrossRefMathSciNetGoogle Scholar
  45. Marcet, A., and T.J. Sargent, (1989b) Convergence of Least Squares Learning in Environments with Hidden State Variables and Private Information, Journal of Political Economy, 97, pp.1306–22.CrossRefGoogle Scholar
  46. Morgenstern O., and von Neumann, J., and (1944): Theory of Games and Economic Behaviour, Princeton University Press, Princeton.Google Scholar
  47. Muth, J.F., 1961, Rational Expectations and the Theory of Price Movements, EconometricaGoogle Scholar
  48. Phillips, R., Freeman, R.E., and A. C. Wicks, (2003): What stakeholder theory is not, Business Ethics Quarterly, vol.13,4, pp.479–502.Google Scholar
  49. Ponsard, C., (1986): Foundations of soft decision theory, in J. Kacprzyk, and R.R. Yeger, eds., Management Decision Support Systems Using Fuzzy Sets and Possibility Theory, Verlag TUV, Rheinland, Köln.Google Scholar
  50. Runde, J., (1990): Keynesian uncertainty and the weight of arguments, Economics and Philosophy, 6, pp. 275–292.ADSCrossRefGoogle Scholar
  51. Runde, J., (1994): Keynesian Uncertainty and liquidity preference, Cambridge Journal of Economics, 18, pp.129–144.Google Scholar
  52. Samuelson, P.A., (1947): Foundations of Economic Analysis, Cambridge, Mass.: Harvard University PressMATHGoogle Scholar
  53. Sargent, T.J., (1993): Bounded Rationality in Macroeconomics, MIT Press, Boston.Google Scholar
  54. Savage, L.J., (1954): The Foundations of Statistics, John Wiley and Sons, New York. Revised and enlarged edition, Dover, New York, 1972.MATHGoogle Scholar
  55. Scarf, H., (1960): Some examples of Global Instability of Competitive Equilibrium, International Economic Review, vol.1,3, pp.157–72CrossRefGoogle Scholar
  56. Schmeidler, D., (1982): Subjective probability without additivity, Working Paper, Foerder Institute for Economic Research, Tel Aviv University.Google Scholar
  57. Schmeidler, D., (1986): Integral representation without additivity, Proceedings of the American Mathematical Society, 97,2, pp.255–261.MATHCrossRefMathSciNetGoogle Scholar
  58. Schmeidler, D., (1989): Subjective probability and expected utility without additivity, Econometrica, 57, pp.571–87.MATHCrossRefMathSciNetGoogle Scholar
  59. Schumpeter, J.A., (1934): The theory of Economic Development, Oxford, Oxford University Press.Google Scholar
  60. Segal, U., (1987): The Ellsberg Paradox and Risk Aversion: An Anticipated Utility Approach, International Economic Review, 28(1), 175–202.MATHCrossRefADSMathSciNetGoogle Scholar
  61. Shackle, G.L.S., 1952, Expectations in Economics, Cambridge, Cambridge University Press.Google Scholar
  62. Simon, H.A., (1982): Models of Bounded Rationality, MIT Press, Cambridge (Mass.).Google Scholar
  63. Simonsen, M.H., Werlang S.R.C., 1991, Subadditive probabilities and portfolio inertia, Revista de Econometria, 11, pp.1–19.Google Scholar
  64. Sonnenschein, H., (1973): Do Walras’ Identity and Continuity Characterize the Class of Community Excess Demand Functions?, Journal of Economic Theory, vol.6, pp.345–354.CrossRefMathSciNetGoogle Scholar
  65. Tobin, J., (1958): Liquidity Preference as Behaviour Toward Risk, Review of Economic Studies, 25, 65–86.CrossRefGoogle Scholar
  66. Vercelli, A., (1991): Methodological foundations of macroeconomics. Keynes and Lucas, Cambridge, Cambridge University Press.Google Scholar
  67. Vercelli, A., (1992): Probabilistic causality and economic analysis: a survey, in A. Vercelli, and N. Dimitri, eds. 1992, Macroeconomics: A Survey of research Strategies, Oxford, Oxford University Press.Google Scholar
  68. Vercelli, A., (1995): From soft uncertainty to hard environmental uncertainty, Economie Appliquée, 48, pp.251–269.Google Scholar
  69. Vercelli, A., (1999): The recent advances in decision theory under uncertainty: a non-technical introduction, in L. Luini, ed., Uncertain Decisions: Bridging Theory and Experiments, Kluwer, Dordrecht.Google Scholar
  70. Vercelli, A., (2000): Financial Fragility and Cyclical Fluctuations, Structural Change and Economic Dynamics, 1, 139–156.CrossRefGoogle Scholar
  71. Vercelli, A., (2002): Uncertainty, rationality and learning: a Keynesian perspective, in S. Dow and J. Hillard, eds., 2002, Keynes, Uncertainty and the Global Economy, vol.II, Edward Elgar, Cheltenham, Glos. (U.K.), pp.88–105.Google Scholar
  72. Vercelli, A., (2003): Updated Liberalism vs. Neo-liberalism: Policy Paradigms and the Structural Evolution of Western Industrial Economies after W.W. II, in Arena-Salvadori, eds., Money, Credit and the State: Essays in Honour of Augusto Graziani, Aldershot, Ashgate, 2003Google Scholar
  73. Walras, L., (1874): Elément d’économie politique pure ou théorie de la richesse socialeGoogle Scholar
  74. Wakker, P., (1989): Continuous Subjective Expected Utility With Non-Additive Probabilities, Journal of Mathematical Economics, 18, pp.1–27MATHCrossRefMathSciNetGoogle Scholar
  75. Willinger, M., (1990): Irréversibilité et cohérence dynamique des choix, Revue d’Economie Politique, 100,6, pp. 808–832.Google Scholar
  76. Woodford, M., (1990): Learning to Believe in Sunspots, Econometrica, 58, pp.277–307.MATHCrossRefMathSciNetGoogle Scholar
  77. Zadeh, L.A., (1965): Fuzzy sets, Information and Control, 8, pp.338–353.MATHCrossRefMathSciNetGoogle Scholar

Copyright information

© Springer-Verlag Italia 2007

Authors and Affiliations

  • A. Vercelli
    • 1
  1. 1.Dipartimento di Politica EconomicaFinanza e SviluppoItaly

Personalised recommendations