Paradoxes versus Formalism in Economics. Evidence from the Early Years of Game Theory and Experimental Economics
University of Siena - Labsi Experimental Economics Laboratory; University of Siena - Department of Social, Political and Cognitive Sciences
Universita di Siena Quaderni Economia Politica Working Paper No. 433
This paper argues that the acceptance of two recent methodological advances in economics, namely game theory and laboratory experimentation, was affected by the history dependence constraining the formalization of economics. After an early period in which the two methods were coolly received by economists because their applications challenged some basic hypotheses of mainstream economics, their subsequent acceptance was the result of the corroboration of those same hypotheses. However, the recent emergence of some paradoxes has finally revealed that the effectiveness of game theory and experimental techniques in economics is improved when descriptively implausible and normatively unsatisfactory assumptions such as the centrality of individual maximization in decision theory and the definition of rationality as consistency in preferences are revised.
Number of Pages in PDF File: 30
Keywords: Paradoxes, game theory, experiments, individual maximization, economic rationality
JEL Classification: B21, B40, C90working papers series
Date posted: August 23, 2004
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