Abstract

http://ssrn.com/abstract=2033641
 
 

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The Empirical Evidence Against Utility Maximization


Asad Zaman


International Institute of Islamic Economics

Mehmet Karacuka


Ege University - Faculty of Economic and Administrative Sciences

June 1, 2011

published with title changed to:" The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature," International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414

Abstract:     
Current Economics Textbooks and Economists justify a theory of consumer behavior based on utility maximization on a priori grounds. This methodology follows Lionel Robbins’ idea that economic theory is based on logical deduction from postulates which are 'simple and indisputable facts of experience.' Strong evidence has emerged from many different lines of research that these 'simple and indisputable facts of experience' are contradicted by human behavior. In this article, we summarize some of main contradictions between predictions of utility theory and actual human behavior. Efforts to resolve these contradictions continue to be made within orthodox frameworks, but it appears likely that a paradigm shift is required.

Number of Pages in PDF File: 59

Keywords: behavioral economics, utility theory

JEL Classification: D010, D100

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Date posted: April 4, 2012 ; Last revised: July 28, 2013

Suggested Citation

Zaman, Asad and Karacuka, Mehmet, The Empirical Evidence Against Utility Maximization (June 1, 2011). published with title changed to:" The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature," International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414. Available at SSRN: http://ssrn.com/abstract=2033641 or http://dx.doi.org/10.2139/ssrn.2033641

Contact Information

Asad Zaman (Contact Author)
International Institute of Islamic Economics ( email )
New Campus
Sector H-10
Islamabad, PA Kpk 44000
Pakistan
92-51-9257939 (Phone)
92-51-9258019 (Fax)
Mehmet Karacuka
Ege University - Faculty of Economic and Administrative Sciences
Bornova, Izmir 35100
Turkey
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