Authors: Matthew Harris Dennis Venter
Abstract:
Decades have passed since Behavioral Economics used cognitive psychology to address the shortcomings of perfect rationality. However, it is concerning that in this time the shortcomings of cognitivism have had seemingly little discussion among economists and debates between psychological schools have not carried over much. Meanwhile, the early contributions of sociology to the theory of rationality have all but been forgotten. The aim of this paper is to provide economics with a more complete view of rationality, one where we are bounded by a mind, which is in turn bounded by the rationality afforded to it by the environment in its present form. Utilizing these alternative approaches, we no longer merely ask how rational agents are but instead ask how much rationality the environment affords. We propose that rationality is developed in the environment as a response to increasing complexities and challenges. We explore a brief history of various measurement devices and the dynamic process whereby our capacity for rationalisation develops as well as the implications for economic growth,
Keywords: Rationality, behavioural economics, sociology, cognitivism, interdisciplinary economics, complexity
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Cite this paper as:
Harris, M. Venter, D. 2021 Out of our minds: The New Boundaries of Rationality, IEDA
DOI
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