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Title:Markets vs. Government when Rationality is Unequally Bounded: Some Consequences of Cognitive Inequalities for Theory and Policy PDF Logo
Authors:Pelikan, Pavel
Issue Date:2006
Series/Report no.:Freiburg discussion papers on constitutional economics 06/5
Abstract:Recognizing that human rationality has bounds that are unequal across individuals entails treating it as a special scarce resource, tied to individuals and used for deciding on its own uses. This causes a meta-mathematical difficulty to the axiomatic theories of human capital and resource allocation, and raises a new problem for comparative institutional analysis, allowing it to explain some so far little understood differences between markets and government. The policy implications strengthen the case against national planning, selective industrial policies, and government ownership of enterprises, but weaken the case against paternalism.
Subjects:Rationality
meta-mathematics
institutions
markets
government
JEL:P51
D61
O16
A10
H10
G10
Document Type:Working Paper
Appears in Collections:Freiburger Diskussionspapiere zur Ordnungsökonomik, Universität Freiburg

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