Continuing my summer streak of reading excellent books, I recently finished Bryan Caplan’s fantastic The Myth of the Rational Voter: Why Democracies Choose Bad Policies. I really like Bryan’s posts over at EconLog, so I’ve been eager to read this book for a long time, and I was not disappointed. Even if you don’t care [...]
In several of my recent posts, I laid out my case for how it might not undermine all of economic thinking to find that people aren’t necessarily rational. One of my key points was that you can model irrationality as rationality, but this does raise the question: What good are models in the first place? [...]
One of the workhorse concepts in Richard McKenzie’s excellent book Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles is the idea that consumers can be rationally ignorant. Consider an argument he puts forth in Chapter 9 (entitled Why So Many Prices End in ‘9′) — he contends that one reason for [...]
Of all the good books I’ve read recently, the best so far is probably Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles by Richard McKenzie. The EconTalk podcast on the subject is an enduring favorite, and I’ve probably listened to it 3 or 4 times since it originally aired last year.
The [...]
Previously, I’ve made the case that for the purposes of modeling, it doesn’t matter if people are truly rational (where rational is defined as always making decisions in such a way to maximize their utility functions to the best of their ability). However, just because, for the purposes of modeling, the two things are equivalent [...]
On Wednesday, I wrote about the role markets play in aggregating information. Today I thought I would go into some more detail about how I see the mechanistic properties of markets. Consider the example of the iterated betting market from my previous post – even throwing out any discussion of incentives, the effect still arises [...]
Seeing as how I like to define logic and symmetry in the context of their relationships with information, it should come as no surprise that I’ve also been very interested in what Hayek had to say about the role of information in markets. The general contention of Hayek’s 1945 paper The Use of Knowledge In [...]
On Friday, I explored the fact that predictable irrationality can be viewed as rationality, but the fact that these things are essentially isomorphic really leads to the disturbing implication that it might not be possible to resolve the question of whether or not we are rational actors. What I am seeing in the literature is [...]
In yesterday’s post, I talked about how people don’t actually need to be rational in order for rational choice theory to be a good way of describing and predicting their behavior. I would put forth that the reason for this is that although there is asymmetry in a superficial dimension (the actual reasons that people [...]
Much of what I’ve been reading I’ve been reading lately has dealt with the subject of rationality and rational choice theory. I’m still trying to get my head around the general arguments about the thing, but I have come up with a basic framework for what I think of the subject.
First off, the arguments that [...]
Physical chemistry Ph.D. student at UC Berkeley and all around curious guy.