Rethinking Microeconomics: A Proposed Reconstruction
WORKING PAPER
(1.96 MB)
The purpose of this paper is to demonstrate that the central empirical findings of microeconomics can be derived from a wide range of individual decision making modes.
There is a large body of evidence indicating that hyperrationality is a bad representation of actual behavior. Nonetheless it is defended on a variety of grounds which range from the claim that it gives analytically tractable results to the one that it yields good empirical predictions. Since analytically tractable results are of little use if they are not empirically relevant, the focus inevitably shifts to the latter. As many have pointed out, the fatal flaw in the argument that only predictions, not assumptions, matter is that assumptions about individual behavior are themselves microeconomic predictions.