Bounded Rationality and Bounded Individuality
Abstract
This paper argues that since the utility function representation of the individual is derived from standard rationality theory, the view that rationality is bounded implies that individuality should be seen to be bounded as well. The meaning of this idea is developed in terms of two ways in which individuality is bounded, with one bound associated with bounded rationality in Kahneman and Tversky’s prospect theory and another bound associated with bounded rationality in Simon’s thinking. The two bounds on individuality are argued to be employed in agent-based modeling and social identity theory. How bounded individuality might be formally modeled is illustrated in an account of Kirman’s Marseille fish market analysis.
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Acknowledgements
Acknowledgment
Thanks for helpful comments on previous versions of this paper go to Asimina Cristoforu, Wade Hands, Alan Kirman, and Geoff Hodgson and the participants in the 2011 Privas Awayday.
Citation
Davis, J.B. (2015), "Bounded Rationality and Bounded Individuality", A Research Annual (Research in the History of Economic Thought and Methodology, Vol. 33), Emerald Group Publishing Limited, Leeds, pp. 75-93. https://doi.org/10.1108/S0743-415420150000033011
Publisher
:Emerald Group Publishing Limited
Copyright © 2015 Emerald Group Publishing Limited