The Rationality of Irrationality

19 Pages Posted: 18 Jun 2009 Last revised: 24 Jan 2012

See all articles by Uri Weiss

Uri Weiss

Polonsky Academy, Van Leer Jerusalem Institute

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Date Written: June 14, 2009

Abstract

The bounded rationality assumption does not contradict the rationality assumption. Specifically, in small decisions it is rational to act like boundedly rational agents. This proposition may provide answers to many challenges to rational choice economic theory that are posed by behavioral economics. In particular, it provides an answer to the "Rabin paradox", and challenges our understanding of how to refute the rationality assumption.

Keywords: rationality, bounded rationality, mistake, computation cost

Suggested Citation

Weiss, Uri, The Rationality of Irrationality (June 14, 2009). Available at SSRN: https://ssrn.com/abstract=1419445 or http://dx.doi.org/10.2139/ssrn.1419445

Uri Weiss (Contact Author)

Polonsky Academy, Van Leer Jerusalem Institute ( email )

Feldman Building
Givat-Ram
Jerusalem, 91904
Israel

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