Re: Assumptions of rational behavior
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We should no longer assume rational behavior when constructing the descriptive models of economic behavior -- and that goes for groups and not just individuals.
The work of various economists and psychologists, in the last decades, has shown that people have a limited understanding of utility, change their utility without realizing it, use criteria which they cannot explain nor account for, etc.
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Sigh. Rational for an economist only means that preferences are transitive. Nothing more. Furthermore, microeconomic theory has been proven to be an extremely powerful predictive as well as analytical tool.
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