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Mathematical models are that, models—a simplified version of a particular phenomenon. Economic models are no different, in particular they presuppose, among ot
by lottin 4y ago
Mathematical models are that, models—a simplified version of a particular phenomenon. Economic models are no different, in particular they presuppose, among other things, that economic agents behave rationally [1].
[1] https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
- TheSpiceIsLife 4y agoThank you for your response, I shall read that Wikipedia entry when I sober up. Australian East Coast Saturday night wooo!
- thelamest 4y agoEconomic “rationality” sometimes gets a bad rap, but it’s more defensible than it may appear and provides a well-circumscribed, workable general foundation to expand on. In simple versions: rational preferences (which include indifference) are transitive and complete, and people pursue these goals. That’s all. Symmetric violations wash away in the aggregate, and asymmetric can be included, e.g. as loss aversion. Criticism of “rationality” is often stuck in late 19th to mid 20th century debates that were since generally resolved.