Bounded rationality at large

It is as if we knew what we were doing



How can institutions construct good decisions out of the aggregate ignorance, laziness, shortsightnedness and chaos that we pump in to them?

A flagship question is is about how the market does so, finding prices (maybe) efficiently despite the boundedly rational dynamics of human decisions. re markets systems for fabricating rational-like behaviour from irrational agents? (Hayek might argue this, and I think also Gode and Sunder of Zero Intelligence Agents fame. Friedman argued that in fact that markets effectively turn people into rational agents, which is yet stronger.)

Are there useful measures of “how much rationality” humans have that we can use for aggregate modelling? (as opp. the minute and detailed ones that Kahnemann and Tversky devise, that are hard to scale up.)

TBC

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