Reflexivity in Economics (eBook)

Acknowledgments 6
Contents 7
Introduction 11
Reflexivity and Self-Reference 14
1.1 Definition 15
1.2 Reference Relations 17
1.2.1 Reflection 19
1.2.2 Universality 19
1.2.3 Ungroundedness 20
1.3 Varieties of Self-Reference 20
1.4 Taxonomies of Self-References 24
1.5 Self-Reference in Natural Language 25
1.6 Self-Reference in Formal Language 29
1.7 Logical Consistency of Self-Reference 30
1.7.1 Self-Reference and Paradoxes 31
1.7.2 Harmless and Harmful Self-Reference 33
1.8 Reflexivity in Human Understanding 34
1.9 Self-Reference in Social and Individual Decision-Making 35
Reflexivity of Social Reality 40
2.1 What is Social Reality? 41
2.2 Recursivity of the Social Reality 42
2.2.1 Reflexivity in Anthropology 43
2.2.2 Reflexivity in Linguistics 45
2.2.3 Reflexivity in Law 48
2.2.4 Reflexivity in Politics 49
2.2.5 Reflexivity in Sociology 50
2.2.6 Reflexivity in Psychology 51
2.2.7 Reflexivity of Economic Reality 53
Reflexivity and Predictability of the Social Sciences 61
3.1 Constructs and Reality 62
3.1.1 Observer, Observation and the Construct of the Self 65
3.1.2 A Constructivist Approach to the Cognitive Processes 67
3.1.3 Scientific Research and Reflexivity 70
3.1.4 Science as Language Game 73
3.1.5 Constructivism and Economics 74
3.2 Recursivity of Social Theorizing and Predictability of Social Reality 75
3.2.1 Social Predictions 76
3.2.2 Explaining and Predicting the Social Reality 77
3.2.3 Reflexive Predictions 80
On the Rationality of the Economic Actors 85
4.1 Questioning the Descriptive Validity of Rational Choice Theory 86
4.1.1 The Neoclassical Defence 87
4.1.2 Allais' Experiments 88
4.1.3 SimonÌs Bounded Rationality Approach 89
4.2 The Bounded Rational Revolution 90
4.2.1 Adaptive and Satisficing Behaviour 92
4.2.2 Principles of Problem-Solving 95
4.2.3 Problem-Solving in Games and Puzzles 97
4.3 Decomposing Rationality 99
4.3.1 Intuition and Reasoning 99
4.3.2 Accessibility 101
4.3.3 Framing Effects 104
4.3.4 Prospect Theory 105
Heuristics, Biases and Methods for Debiasing 109
5.1 Bounded Rational Heuristics 110
5.1.1 Building Blocks of Bounded Rational Heuristics 111
5.1.2 Main Features of Bounded Rational Heuristics 112
5.2 Heuristics and Biases 115
5.2.1 Representativeness Heuristic 115
5.2.2 Availability Heuristic 116
5.2.3 Adjustment and Anchoring 116
5.3 Debiasing 117
5.3.1 Debiasing the Representativeness Heuristics 120
5.3.2 Debiasing the Availability Heuristic 122
5.3.3 Debiasing Adjustment and Anchoring 122
5.4 Concluding Remarks on Debiasing and Some Implications for Theory Absorption 123
Self-Referentiality of Economic Theories and Theory Absorption 127
6.1 Economic Methodology 128
6.2 Self-Referentiality of Economic Theory and Theory Absorption 131
6.2.1 Self-Referential Theories 132
6.2.2 Introducing the Notion of Theory Absorption 133
6.2.3 Determinants of Theory Absorption 135
6.2.4 Some Theoretical Implications of Theory Absorption 136
6.3 Theory Absorption among Bounded Rational Decision- Makers 140
6.3.1 Individual Absorbability of Theories 141
6.3.2 Full Absorbability of Theories 143
6.3.3 Partial Absorbability of Theories 146
6.4 Applications of Theory Absorption to Economic Policy Advising 148
On the Absorbability of Economic Theories - An Experimental Analysis 152
7.1 The Experimental Method in Economics 153
7.2 A Possible Experimental Approach for Testing the Self- Referentiality and Absorbability of Economic Theories 154
7.3 Related Experimental Studies 157
7.4 Some Preparatory Attempts 159
7.4.1 An Experimental Attempt of Debiasing the Conjunction- Effect Bias through Meta- Information 159
7.4.2 A Classroom Experiment on Theory Absorption in Multilateral Integrative Negotiations 160
7.4.3 An Experimental Guessing-Game in the Classroom with Information Feed- Back and Meta- Instructions 161
7.5 On the Absorbability of Guessing Game Theory 162
7.5.1 On the Guessing Game 164
7.5.2 Iterated Elimination of Dominated Strategies in Guessing Games 166
7.5.3 The Experimental Design 167
7.5.4 Experimental Results 169
7.5.5 Conclusions 176
7.6 An Experimental Study on the Absorbability of Herd Behaviour and Informational Cascades Theories 178
7.6.1 Herding and Informational Cascades 178
7.6.2 A Simple Model of Informational Cascades: A Dichotomy Choice Model 180
7.6.3 Experimental Design 183
7.6.4 Results 184
7.6.5 Conclusions 188
7.7 Concluding Remarks on the Experimental Examination 189
Conclusion 190
Appendix 193
1 Instructions to the Experiment on the Absorbability of Guessing Game Theory 193
1.1 Example 193
1.2 Additional Tips 194
2 Instructions to the Experiment on the Absorbability of Informational CascadesÌ Theory 196
2.1 Additional Tips 197
Literature 200