Unrealistic Assumptions in Rational Choice Theory

Abstract

The most common argument against the use of rational choice models outside economics is that they make unrealistic assumptions about individual behavior. We argue that whether the falsity of assumptions matters in a given model depends on which factors are explanatorily relevant. Since the explanatory factors may vary from application to application, effective criticism of economic model building should be based on model-specific arguments showing how the result really depends on the false assumptions. However, some modeling results in imperialistic applications are relatively robust with respect to unrealistic assumptions.

Interdisciplinary modeling: a case study of evolutionary economics

“…When this occurs, it is of course necessary to say something in defense of any false assumptions incorporated via the analogy. An example of attempting to defend false assumptions within analogical models comes from Aki Lehtinen and Jaakko Kuorikoski's discussion of the unrealistic assumptions carried over in the application of rational choice theory outside of economics (Lehtinen and Kuorikoski 2007). The authors contend that, ''the assumption of self-interest is not explanatorily important in a model if it can be replaced with another behavioral assumption without changing the analytical results.…”

Alan Kirman's Complex economics: individual and collective rationality. The Graz Schumpeter Lectures. London: Routledge, 2011, 272pp.

“…In this, it presents an interesting challenge to philosophers of economics to develop more sophisticated views of qualified realisticness which admit partiality, provisionality, and progressiveness. This project will undoubtedly need to address prominent views on realisticness in economic models, such as Lehtinen and Kuorikoski's (2007), and Mäki's (2009). Refocusing modelling from equilibrium to organization seems to be fertile ground for this discussion for those who find the claims of greater realisticness intuitively appealing but in need of much work.…”

Derivational robustness, credible substitute systems and mathematical economic models: the case of stability analysis in Walrasian general equilibrium theory

“…It will be demonstrated that derivational robustness was a main reason why economists initially thought the stability literature was positive-why it increased confidence in the Walrasian general equilibrium model-but 7 This is a modified version of the characterization of robustness in Odenbaugh and Alexandrova, (2011, p. 764). 8 The recent literature supporting various types of robustness analysis in economics includes: Guala and Salanti 2003;Kuorikoski and Lehtinen 2009;Kuorikoski et al 2010Kuorikoski et al , 2012Lehtinen and Kuorikoski 2007;Lehtinen and Marchionni 2011;Weisberg 2013;and Woodward 2006. For critical remarks on robustness analysis see Cartwright (1991Cartwright ( , 2007Cartwright ( , 2009), Odenbaugh andAlexandrova (2011), andReiss (2012).…”