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

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dc.contributor.authorŠťastný, Dan
dc.date.accessioned2016-01-21T09:26:13Z
dc.date.available2016-01-21T09:26:13Z
dc.date.issued2014
dc.description.abstract-translatedEconomists’ 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 economists' efforts 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 economists' research program.en
dc.format10 s.cs
dc.format.mimetypeapplication/pdf
dc.identifier.citationE+M. Ekonomie a Management = Economics and Management. 2014, č. 2, s. 4-13.cs
dc.identifier.doidx.doi.org/10.15240/tul/001/2014-2-001
dc.identifier.issn1212-3609 (Print)
dc.identifier.issn2336-5604 (Online)
dc.identifier.urihttp://www.ekonomie-management.cz/download/1402489568_89bf/01_THE+ECONOMICS+OF+BEING+STUPID.pdf
dc.identifier.urihttp://hdl.handle.net/11025/17549
dc.language.isoenen
dc.publisherTechnická univerzita v Libercics
dc.relation.ispartofseriesE+M. Ekonomie a Management = Economics and Managementcs
dc.rights© Technická univerzita v Libercics
dc.rightsCC BY-NC 4.0cs
dc.rights.accessopenAccessen
dc.subjectiracionalitacs
dc.subjectracionální hádankycs
dc.subjectstanovení cenycs
dc.subjectdivadlacs
dc.subject.translatedirrationalityen
dc.subject.translatedrational riddlesen
dc.subject.translatedpricingen
dc.subject.translatedtheatresen
dc.titleThe economics of being stupid: a note on (ir)rationality in economicsen
dc.typečlánekcs
dc.typearticleen
dc.type.statusPeer-revieweden
dc.type.versionpublishedVersionen

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Číslo 2 (2014)
Číslo 2 (2014)