An Unothodox Critic of Rationality

For an unorthodox criticism of assumptions of rationality in economics see Dr. Michael Towsey, Queensland University [Warning, it is a very long article HERE]:

“The Biopsychology of Cooperation - Part 2”

"Numerous experiments have revealed that human economic decision making is far more complex than accepted by the simple theory of maximising gain. This turns out to be true even for animals. For example, if two monkeys perform the same task side by side, and one is rewarded a grape (big money) and the other a cucumber (small money), the latter will throw a tantrum and toss the cucumber out of its cubicle. Yet if both receive a cucumber, both eat happily. Conclusion: monkeys show an aversion to inequality. The reward does not even have to be physical - it can be the affectionate attention of laboratory staff. - Michael Towsey

Comment
I have no views on the source of the article. It may be worth a look, or not.

Eulogy To The Rational Expectations Hypothesis

Dr Madsen Pirie writes in the Adam Smith Institute Blog (10 November) HERE: a trenchant expose of the failings of the rational expectations hypothesis:

“One of the few good things to come out of the financial crisis is a re-examination of the fundamentals of Austrian Economics. One of them is that value is entirely subjective, residing in the mind of the individual, not in the object contemplated, and that it changes over time and is different between individuals. This is light years away from the REH-based models that have dominated academic economics, and treated it as practically a subset of mathematics. For some years now most academic economists have talked only to each other, describing in ever more detail a fantasy world that never touches reality. If the crisis undermines the heresy of Rational Expectations, at least some good will have come from it.”

Comment
I agree entirely with Madsen Pirie and commend his Blog article to all readers. It is the best, clear and explicit statement on the dead-end, black hole into which most modern economists has slid into that I have read for a long while.

[Disclosure: I am a Fellow of the Adam Smith Institute.]