Great stuff. I think it's an uncanny valley problem. Suppose you were modeling animal behaviour. How would a bear behave if he were trying to hit a calorie optimum as a function of energy expended and food consumed. This may be a good model of actual bear behaviour or it might not be. But I doubt you'd get criticisms along the lines of bears are just dumb animals they don't do math. But when considering human behaviour the natural reaction is: this isn't how I make my decisions, so the model and any of it's conclusions are irrelevant regardless of model fit.
Read Ran Spiegler’s new book on the “The Curious Culture of Economic Theory” , Ch 8. There is a “engineering” branch of economics call mechanism design which as evolved into market design that starts with behavioral assumptions but has nothing to do with equilibrium.
This is one of those posts to savor. Rationality? Not Needed. Equilibrium? Not necessarily static. Time causing seemingly irrational behavior? Oh yes. Talk to any 20-year old about saving for retirement.
"Most people don’t spend their days building simplified versions of reality and arguing about which simplifications matter."
Not true. That is exactly what every day common sense is, building a simplified model of reality. Most criticism of economic models is based on a still MORE simplified model.
Great stuff. I think it's an uncanny valley problem. Suppose you were modeling animal behaviour. How would a bear behave if he were trying to hit a calorie optimum as a function of energy expended and food consumed. This may be a good model of actual bear behaviour or it might not be. But I doubt you'd get criticisms along the lines of bears are just dumb animals they don't do math. But when considering human behaviour the natural reaction is: this isn't how I make my decisions, so the model and any of it's conclusions are irrelevant regardless of model fit.
Read Ran Spiegler’s new book on the “The Curious Culture of Economic Theory” , Ch 8. There is a “engineering” branch of economics call mechanism design which as evolved into market design that starts with behavioral assumptions but has nothing to do with equilibrium.
This is one of those posts to savor. Rationality? Not Needed. Equilibrium? Not necessarily static. Time causing seemingly irrational behavior? Oh yes. Talk to any 20-year old about saving for retirement.
wow, the assumptions might be wrong but the empirics are right--what a hilariously based discipline
"Most people don’t spend their days building simplified versions of reality and arguing about which simplifications matter."
Not true. That is exactly what every day common sense is, building a simplified model of reality. Most criticism of economic models is based on a still MORE simplified model.