Should we abandon optimization theory? The need for bounded rationality

Journal of Economic Methodology 7 (3):395-426 (2000)
Abstract
This paper makes explicit the rhetoric of optimization. Various arguments are examined, in order to determine whether we should retain optimization theory or assume bounded rationality. Empirical evidence confounds optimization theory; in the face of experimental studies, an empirical dilemma emerges, according to which we should discard either the theory of expected utility or the criterion of empirical refutation. Methodological criticisms attack optimization theory's epistemological status; together, they give rise to a methodological trilemma, according to which optimization theory is indeterminate, unfalsifiable or tautological. Methodological defences seem to protect optimization theory against criticism; but a more careful examination shows that either they involve logical defects or they rest upon a conceptual gap. Theoretical difficulties plague optimization theory; though various extensions have been proposed, optimization theory entails a theoretical dilemma, according to which one must choose between unrealistic environment and unrealistic abilities. Should we abandon optimization theory? The leading question will be answered in the affirmative: optimization theory should be abandoned and bounded rationality should be assumed.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
Options
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history Request removal from index
 
Download options
PhilPapers Archive


Upload a copy of this paper     Check publisher's policy on self-archival     Papers currently archived: 12,084
External links
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library
References found in this work BETA

No references found.

Citations of this work BETA

No citations found.

Similar books and articles
Paul Weirich (2010). Optimization and Improvement. [REVIEW] Philosophical Studies 148 (3):467 - 475.
Daniel R. Fusfeld (1996). Rationality and Economic Behavior. Journal of Economic Methodology 3 (2):307-315.
Duane Windsor (2007). Constrained Multiple Goal Optimization as a Theory of the Firm. Proceedings of the International Association for Business and Society 18:283-288.
Thomas L. Clarke (2005). Sleep is Optimizing. Behavioral and Brain Sciences 28 (1):66-67.
Analytics

Monthly downloads

Added to index

2012-02-20

Total downloads

11 ( #143,992 of 1,101,892 )

Recent downloads (6 months)

4 ( #91,837 of 1,101,892 )

How can I increase my downloads?

My notes
Sign in to use this feature


Discussion
Start a new thread
Order:
There  are no threads in this forum
Nothing in this forum yet.