Rationality in Economics
Constructivist and Ecological Forms

This book explores constructivist and ecological approaches to rationality in economics.

Vernon L. Smith (Author)

9780521133388, Cambridge University Press

Paperback, published 12 October 2009

386 pages, 10 tables
22.6 x 15.2 x 1.3 cm, 0.52 kg

'… a rich book that is full of stimulating ideas …' History of Economic Ideas

The principal findings of experimental economics are that impersonal exchange in markets converges in repeated interaction to the equilibrium states implied by economic theory, under information conditions far weaker than specified in the theory. In personal, social, and economic exchange, as studied in two-person games, cooperation exceeds the prediction of traditional game theory. This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of F. A. Hayek: through emergent socio-economic institutions and cultural norms, people achieve ends that are unintended and poorly understood. In cultural changes, the role of constructivism, or reason, is to provide variation, and the role of ecological processes is to select the norms and institutions that serve the fitness needs of societies.

Part I. Rationality, Markets, and Institutions: 1. Rediscovering the Scottish philosophers
2. On two forms of rationality
Part II. Impersonal Exchange: The Extended Order of the Market: 3. Relating the two concepts of a rational order
4. Market institutions and performance
5. Asymmetric information and equilibrium without process
6. Spectrum auctions and combinatorial designs: theory and experiment
7. Psychology and markets
8. What is rationality?
Part III. Personal Social Exchange: 9. Emergent order without the law
10. The effects of context on behavior
Appendix: behavioral deviation from prediction: error, confusion, or evidence of brain function?
11. Investment trust games: effects of gains from exchange in dictator giving
12. Reciprocity in trust games
Part IV. Order and Rationality in Method and Mind: 13. Rationality in science
14. Neuroeconomics: the internal order of the mind
15. A summary.

Subject Areas: Economics [KC], Psychology [JM], History of ideas [JFCX]