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Title:Coping with unpleasant surprises in a complex world: Is rational choice possible in a world with positive information costs? PDF Logo
Authors:Congleton, Roger D.
Issue Date:2011
Series/Report no.:Diskussionspapier // Centrum für Interdisziplinäre Wirtschaftsforschung 6/2011
Abstract:This paper provides a rational choice-based analysis of the causes and consequences of surprise events. The paper argues that ignorance may be rational, but nonetheless produce systematic mistakes, inconsistent behavior, and both pleasant and unpleasant surprises. If ignorance and unpleasant surprises are commonplace and relevant for individual and group decisionmaking, we should observe standing institutions for dealing with them - and we do. Insofar as surprises are consistent with rational choice models, but left outside most models, it can be argued that these methodological choices mistakenly limit the scope of rational choicebased research.
Subjects:Ignorance
Rational Ignorance
Natural Ignorance
Bounded Rationality
Rational Choice
Biased Expectations
Crisis Management
Social Insurance
Bailouts
Economics of Information
JEL:D8
D6
Document Type:Working Paper
Appears in Collections:Diskussionsbeiträge des Centrums für Interdisziplinäre Wirtschaftsforschung, WWU Münster

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