Contribution to Book
Rationality - what? Misconceptions of Neoclassical and Behavioral Economics
The Cambridge Handbook of Classical Liberal Thought
(2018)
Abstract
Both behavioral and neoclassical economists maintain a concept of strict rationality that is exceptionally narrow. Neoclassicists use it as a tool both to explain what agents actually do and as a prescriptive framework. Behavioralists do not believe it adequately explains actual behavior but that it is still a good prescriptive framework. My view is that whatever the technical virtues of strict, narrow rationality in providing a foundation for useful economics constructs, it is completely inadequate as a prescriptive standard. The appropriate concept of rationality for evaluation purposes must be “liberal” or broad, reflecting the complexities of human decisionmaking. Behavioral economists are blind to much of this at a normative-prescriptive level. So their critique of market or other outcomes is impoverished.
Keywords
- Irrationality,
- Biases,
- Ecological Rationality,
- Welfare
Disciplines
Publication Date
August, 2018
Editor
M. Todd Henderson
Publisher
Cambridge
Series
Cambridge Law Handbooks
ISBN
9781108242226
Citation Information
Mario J Rizzo. "Rationality - what? Misconceptions of Neoclassical and Behavioral Economics" The Cambridge Handbook of Classical Liberal Thought (2018) p. 191 - 212 Available at: http://works.bepress.com/mario_rizzo/47/