Bounded-Rationality Models: Tasks to Become Intellectually Competitive
Ronald M. Harstad
Journal of Economic Literature
no. 2, June 2013
Research in experimental economics has cogently challenged the fundamental precept
of neoclassical economics that economic agents optimize. The last two decades have seen
elaboration of boundedly rational models that try to move away from the optimization
approach, in ways consistent with experimental findings. Nonetheless, the collection
of alternative models has made little headway supplanting the dominant paradigm.
We delineate key ways in which neoclassical microeconomics holds continuing and
compelling advantages over bounded-rationality models, and suggest, via a few
examples, the sorts of further, difficult pushes that would be needed to redress this
state of affairs. Closer collaboration between theoretic modeling and experiments is
clearly seen to be necessary.
Harstad, Ronald M., and Reinhard Selten.
"Bounded-Rationality Models: Tasks to Become Intellectually Competitive."
Journal of Economic Literature,
Economic Methodology: General
Design of Experiments: General
Microeconomic Behavior: Underlying Principles
Firm Behavior: Theory