Bounded rationality and altruism: behaviourism in economics

Golovics, József (2015) Bounded rationality and altruism: behaviourism in economics. HITELINTÉZETI SZEMLE, 14 (2). pp. 158-172. ISSN 1588-6883

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Abstract

This essay is intended to respond to the criticism of economic science that it builds its models on unrealistic assumptions from the start. Perfect rationality and the axiom of self-interest are indeed two of the main tenets of neoclassical economics. In this paper, however, we argue that the application of these doctrines is far from exclusive. Indeed, with the achievements of the behaviourist approach and behavioural economics, the theory of bounded rationality was accepted as early as the last century in this scientific area, along with the recognition of altruistic behaviour. Many of these achievements have been more or less integrated into mainstream thinking by now, and once applied, by relying on more psychologically realistic assumptions they may significantly contribute to improving the forecasting power of economic models.

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