Fama's critique, for those interested: " In Daniel Kahneman’s book...he states that our brains have two sides: One is rational, and one is impulsive and irrational. What behavior can’t be explained by that model?" This seems fairly fundamental. Rational choice theory, for all its problems, at least provides a formal structure for analyzing economic phenomena. Behavioural econ, and the heuristics and biases program, doesn't do this. It basically offers post hoc explanations of deviations from rational choice. And that's all. The main heuristics (availability, representativeness, anchoring and adjustment) are so broadly specified as to have basically no predictive power or explanatory power.
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Thank you David. Very informative...
Fama's critique, for those interested:
" In Daniel Kahneman’s book...he states that our brains have two sides:
One is rational, and one is impulsive and irrational. What behavior can’t be explained by that model?"
This seems fairly fundamental. Rational choice theory, for all its problems, at least provides a formal structure for analyzing economic phenomena.
Behavioural econ, and the heuristics and biases program, doesn't do this. It basically offers post hoc explanations of deviations from rational choice. And that's all.
The main heuristics (availability, representativeness, anchoring and adjustment) are so broadly specified as to have basically no predictive power or explanatory power.
Q sent me , in Bill gates video he had on his desk titled : How to lie with Statistics
What about poets?