The economics of being stupid: a note on (ir)rationality in economics

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dc.contributor.authorŠťastný, Dan
dc.contributor.otherEkonomická fakultacs
dc.date.accessioned2014-06-05
dc.date.available2014-06-05
dc.date.defense2014-06-11
dc.description.abstractEconomists’ habit of imputing rational motives to all human behavior gives rise to ‘rational riddles’: rational explanations for seemingly irrational behavior. In the article I argue that economists’ solutions to these riddles are, despite their sophistication, of limited scientific value as they describe mechanisms that are never both new and correct: they may be empirically correct but not new as these mechanisms have been practiced (hence known) by some people before; or they are genuinely new (previously unknown to anybody), but empirically wrong as they fail to account for the real reasons of observed behavior. I further show that the hypothesized solutions to the riddles could be easily tested by consulting the people whose behavior is examined, and point to the strange lack of economistsefforts to do so. Finally I present results of a micro survey relating to one such rational riddle: ticket underpricing (why prices of tickets for various events do not adjust to eliminate the excess demand). By interviewing managers of theatres known to sell tickets at prices that create lines, I present some evidence showing that it is much easier to explain the observed behavior in terms of plain ignorance of some elementary economic principles or facts rather than in terms of some economic sophistication on the part of the managers. No interviewees, for example, explicitly related the existence of lines to ticket underpricing, and some actually denied any link there even if prompted. I conclude by pointing to the real cost to the economic profession stemming from its decision to ignore the possibility of irrationality in economistsresearch program.en
dc.formattext
dc.format.extent4-13 s.cs
dc.identifier.doi10.15240/tul/001/2014-2-001
dc.identifier.eissn2336-5604
dc.identifier.issn12123609
dc.identifier.urihttps://dspace.tul.cz/handle/15240/7055
dc.language.isoen
dc.publisherTechnická Univerzita v Libercics
dc.publisherTechnical university of Liberec, Czech Republicen
dc.publisher.abbreviationTUL
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dc.relation.ispartofEkonomie a Managementcs
dc.relation.ispartofEconomics and Managementen
dc.relation.isrefereedtrue
dc.rightsCC BY-NC
dc.subjectbrownfieldsen
dc.subjectredevelopment potentialen
dc.subjectA-B-C classificationen
dc.subjectCzech Republicen
dc.titleThe economics of being stupid: a note on (ir)rationality in economicsen
dc.typeArticleen
local.accessopen
local.citation.epage13
local.citation.spage4
local.facultyFaculty of Economics
local.fulltextyes
local.relation.abbreviationE&Men
local.relation.abbreviationE+Mcs
local.relation.issue2
local.relation.volume17
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