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Random behavior and the as-if defense of rational choice theory in demand experiments

Moscati, Ivan and Tubaro, Paola (2009) Random behavior and the as-if defense of rational choice theory in demand experiments. LSE Choice Group working paper series, vol. 5, no. 4. The Centre for Philosophy of Natural and Social Science (CPNSS), London School of Economics, London, UK.

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Abstract

Rational choice theory (RCT) models decision makers as utility maximizers and is often defended via an as-if argument. According to this argument, although real individuals do not consciously maximize their utility function, their choices can be explained as if they were generated by utility maximization. An alternative model is random-choice, which assumes that decision makers pick up an element from a given set according to a uniform distribution on the set. In this paper we examine a series of experiments that compare RCT and the random-choice model as alternative explanations of consumer demand, and investigate how these experiments contribute to clarifying the actual scope of RCT and the shortcomings of the standard as-if defense of it.

Item Type: Monograph (Working Paper)
Official URL: http://www2.lse.ac.uk/CPNSS/Home.aspx
Additional Information: © 2009 The authors
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Research centres and groups > LSE Choice Group
Research centres and groups > Centre for Philosophy of Natural and Social Science (CPNSS)
Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: vol. 5, no. 4
Date Deposited: 08 Feb 2010 10:11
URL: http://eprints.lse.ac.uk/27001/

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