Peter Dorman — Rationality: The Issue Is Not the Issue

Here I would like to propose that the rationality dispute, while important, is not that important (an obscure reference to Lewis Mumford on Wilhelm Reich). In fact, for most macroeconomic questions whether or not you assume individuals are rational has almost no bearing at all. Here is an off-the-top-of-my-head list of modeling assumptions modern macroeconomists make that are not about rationality but actually drive their results....

These are enormous problem areas for economic theorizing, and none of them are about whether or not people are “irrational”. Rather, taking in the picture as a whole, debates over rationality seem narrow and misplaced. Alas, the current Riksbank award will tend to focus attention on the status of the rationality assumption, as if it were the fault line on which economic theory sits.

Not Quite Noahpinion
Rationality: The Issue Is Not the Issue
Peter Dorman