Journal of Economic Methodology 27 (3):212-225 (2020)

John R. Welch
Saint Louis University
Econs are presumed to be unboundedly rational, while Humans are boundedly rational. Nevertheless, in certain conditions, Econs aiming to optimize would choose like Humans trying to satisfice. The conditions are imposed by Knightian uncertainty. Although expected utilities are incalculable in these conditions, an Econ could still optimize by relying on a comparative version of decision theory that takes inputs of comparative plausibility and desirability and produces outputs of plausibilistic expectation. The paper shows that comparative decision theory is a special case of heuristics identified by the research programme on simple heuristics. In conditions of Knightian uncertainty, an Econ optimizing with comparative decision theory would make the same decisions as a Human applying these simple heuristics. This result is methodologically relevant for two reasons: comparative decision theory and simple heuristics converge to the same results, and this convergence permits clarification of the relation between normative and descriptive approaches to rational choice.
Keywords decision theory  bounded rationality  optimization  satisficing  plausibility  simple heuristics
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Reprint years 2020
DOI 10.1080/1350178x.2019.1704841
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Judgement Under Uncertainty: Heuristics and Biases.Daniel Kahneman, Paul Slovic & Amos Tversky - 1985 - British Journal for the Philosophy of Science 36 (3):331-340.
Rational Choice and the Structure of the Environment.Herbert A. Simon - 1956 - Psychological Review 63 (2):129-138.

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