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Forms of Bounded Rationality in Economic Theory

The thesis is about the possible consequences in economic theory of “Bounded Rationality”. For Bounded Rationality I mean limitations of both knowledge and computational capacity. In part I the idea of Bounded Rationality is applied to the consumption theory. In particular, the consumers considered do not completely know their own utility function (chapter 2) e do not take in consideration the network structure connecting them with their neighbour (chapter 3). In part II oligopoly markets with boundedly rational firms are analyzed. Firms use naïve expectations about the choices of the other firms (chapter 4) or they know only locally the demand function (chapter 5). At last, in part III, financial markets with boundedly rational heterogeneous speculators are considered (chapter 6).

Mostra/Nascondi contenuto.
Chapter 1 Bounded Rationality You regard men as in�nitely sel�sh and in�nitely farsighted. The �rst hypothesis may perhaps be admitted in a �rst approximation, the second may call for some reservation. H.Poincar� to L.Walras 1.1 Introduction The term bounded rationality is thought to have been coined by the Nobel laureate Herbert Simon, so who better than him to de�ne it? In The New Palgrave Dictionary of Economics, Simon de�nes bounded rationality as �...ra- tional choice that takes into account the cognitive limitations of the decision- maker - limitations of both knowledge and computational capacity�[111]. So, a boundedly rational decision-maker must be limited in some sense. Simon mentions two kinds of limitations. First, s/he can be limited in knowledge, in the sense that s/he does not possess all the relevant information for making her/his decisions. In fact, in some cases information is spread among people and, when possible, is not costless to obtain them. Simon speaks about the information gathering process [110]. The decision-maker may even prefer to formulate her/his plan and take her/his decisions without all the relevant in- formation because the cost may not justify the higher satisfaction they would allow. In other cases information is just not available. The second limita- tion concerns the computational capacity of the decision maker. Even if s/he owned all the relevant information it may not be so easy to evaluate correctly the results related to all possible available choices. For instance, in order to �nd the best choice, the decision maker has to be able to solve optimization problems which sometimes require the use of sophisticated mathematical in- struments. In [111] Simon also suggest how theories of bounded rationality can 5

Tesi di Dottorato

Dipartimento: Diaprtimento di Economia

Autore: Fabio Tramontana Contatta »

Composta da 158 pagine.

 

Questa tesi ha raggiunto 222 click dal 13/05/2009.

Disponibile in PDF, la consultazione è esclusivamente in formato digitale.