The Problems with Heuristics for Law by Russell Korobkin :: SSRN

Via Scoop.it – Bounded Rationality and Beyond

The essay analyzes the decision process in economics and its relationship with the concept of rationality starting from the theory of rational choice, that is, a systemic approach based on the formal axiomatic method applied mainly in the microeconomic field, which has become the heart of neoclassical economics. The work also focuses on the important contribution of the cognitive economics to the concept of rationality and, consequently, of criticism that this theoretical approach moves to the standard economic theory in the definition of choices, indicating a systematic discrepancy between theory and empirical evidence. Moreover, the analysis puts forward the topic of rational expectations, as the rationality of expectations concerns the preferences, and also because the hypothesis of rational expectations has characterized the development of modern macroeconomics and influenced the issue of the efficient use of information by the economic agents. This work wants to highlight, using a very little formal language, the complexity of the choice process and the unsolved relationship between economic and psychological dimensions of such a process, but at the same time it wants to argue that the economic theory as a whole is far away today from an abstract conception perfectly rational and fully informed individuals which choose without making mistakes.
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