The Empirical Evidence Against Utility Maximization

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

59 Pages Posted: 4 Apr 2012 Last revised: 28 Jul 2013

See all articles by Asad Zaman

Asad Zaman

PIDE; Al-Nafi

Mehmet Karacuka

Ege University - Faculty of Economic and Administrative Sciences

Date Written: June 1, 2011

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.

Keywords: behavioral economics, utility theory

JEL Classification: D010, D100

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: https://ssrn.com/abstract=2033641 or http://dx.doi.org/10.2139/ssrn.2033641

Asad Zaman (Contact Author)

PIDE ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan

Al-Nafi ( email )

64 Fullerton Crecent
Markham, Ontario L35 3G5
Canada

Mehmet Karacuka

Ege University - Faculty of Economic and Administrative Sciences ( email )

Bornova, Izmir 35100
Turkey

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,032
Abstract Views
4,164
rank
25,345
PlumX Metrics