What Say You, Economists?
Triggered by a series of discussions here and there, Tirta posed the following 'challenge'. -- Manager
Following our interesting -- and at times heated -- discussion on the limits of economic analyses in explaning human decision making (e.g. this, this, this, this, and this), here are two Daniels:
Economists often criticize psychological research for its propensity to generate lists of errors and biases, and for its failure to offer a coherent alternative to the rational-agent model. This complaint is only partly justified: psychological theories of intuitive thinking cannot match the elegance and precision of formal normative models of belief and choice, but this is just another way of saying that rational models are psychologically unrealistic. - Daniel Kahneman (2003), "Maps of Bounded Rationality: Psychology for Behavioral Economics", The American Economic Review, 93(5), p.1449.
Most modern economists would disagree with this statement [Wealth may be measured by counting dollars, but utility must be measured by counting how much goodness those dollars buy.] because economics is currently committed to an assumption that psychology abandoned a half-century ago, namely, that a science of human behavior can ignore what people feel and say and rely solely on what people do. - Daniel Gilbert (2006), Afterword, "Stumbling on Happiness".So what say you, economists?