Cognitive Variables and Parameters in Economic Models
University of Cape Town - Faculty of Commerce - School of Economics; Center for Economic Analysis of Risk, Georgia State University
May 1, 2011
GROUNDING SOCIAL SCIENCES IN COGNITIVE SCIENCE, R. Sun, ed., MIT Press, Forthcoming
The paper critically reviews the impact of models of cognitive architecture on economics. A historical survey is provided that indicates the reasons for most economists’ non-participation, as either producers or consumers, in the cognitive revolution. The remainder of the paper shows, partly by means of a case study of economists’ models of temporally inconsistent consumption, that economists continue to bypass cognitive architectural considerations, even when modeling a phenomenon that they recognize as implicating representational and framing idiosyncrasies. This is not attributed to economists’ alleged disinterest in empirical facts or over-commitment to normative rationality. Rather, it stems from the fact that, on the one hand, most behavioral economists and neuroeconomists remain strongly committed to methodological individualism; while, on the other hand, experimental economists who follow Vernon Smith in emphasizing ecological rationality are so far mainly interested in aggregate responses. This divergence of assumptions and interests results in neglect among economists of Marr’s ‘algorithmic’ level of cognitive task analysis – precisely the ground on which people’s strategic problems might be considered in tandem with the biological restrictions on the computations they perform.
Number of Pages in PDF File: 25
Keywords: cognitive architecture, economic behavior, ecological rationality
JEL Classification: B21, B25, B41, D01, D03, D87Accepted Paper Series
Date posted: December 18, 2011
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