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Read: Rational Decisions

Ken Binmore’s Rational Decisions is not quite what I expected when I first read just the title. It is, however, something you should very much expect from Ken Binmore. He is an excellent Game Theorist. And even though he eyes current experimental economics rather critically, i. e. he is just more skeptical about some of the claims your standard experimental economists (or are these rather behavioral economists?) are willing to make, his research is very much based on empirical findings, experiments and the boundedness of human capabilities and facilities.

Rational Decisions is about Bayesian Decision Theory. It is about where it can apply and where not. Bayesian Decision Theory It is useful in Games, in situation in which everything is known up to an exactly quantified level of risk. It is utterly “ridiculous” if the decision maker instead is confronted with uncertainty as is the case in the real world where most events do not have a unique objective probability.

Rational Decisions is, therefore, about filling the gap between Decision Making under risk and Decision Making under uncertainty. In my opinion, it is ultimately about an instance of Bounded Rationality.

Binmore gives a comprehensive overview of the standard economic model of decision making and its limitations. He explores the foundations of this model, reviews the historical context and clarifies how Economic Theory has to be interpreted, that current Economic Theory (i. e. the concept of revealed preferences and utility) is not concerned with psychological motives at all.

His writing is witty and opinionated, yet, succinct and clear. Though, sometimes the math made me think twice… All in all, Rational Decisions is a very enlightening experience.

Read: The Making of an Economist, Redux

I am not at an economics department any more. Yet, I am still interested in the profession. Maybe even more interested than a few years before. David Colander provides with The Making of an Economist, Redux a brief overview about the state of the economics curriculum and the economics student at a few of the elite US universities in the early 2000.

I am a little bit disappointed, disillusioned and reaffirmed.

Disappointed because I expected more from this book. The content is mostly fine as far as the topic allows. The presentation, however, could be improved considerably. All the endless tables should have been made into less messy and more clear graphical illustrations. Or at least been complemented with them. The data analysis is cursory, yes. But, I guess this serves a purpose. The data may suffer from several biases and the current analysis does not pretend any false precision or representativeness.

Disillusioned because US economics students may be even more ignorant than I would have thought before. The system really seems to produce basically only a conforming mass of idiot savants.

Reaffirmed because there seems to be only minor differences between the economics education in the US and Germany. In both places the history of economic thought and more broader philosophical questions are not addressed any more – at economics departments. General knowledge about economics is under-appreciated and training focuses on producing least publishable units.

I wonder: Is there any comparable research done for Germany and / or Europe?