The government economic agenda in a society of unequally rational individuals

Pelikan, Pavel (2008): The government economic agenda in a society of unequally rational individuals.

Abstract

What economic roles, if any, should government play? This is still an incompletely analyzed issue that different individuals – depending on their ideologies, rent-seeking opportunities, and analytical abilities – may answer very differently. To advance its analysis, this paper recognizes that human rationality (as empirically testable cognitive abilities) is bounded unequally across individuals, and is therefore a unique scarce resource that markets and government allocate in significantly different ways. The results conflict with ideologies of both socialism and classical liberalism, but agree with two puzzles of recent economic history and with ideological compromises in actual economic policies.

• Item Type: MPRA Paper
• Language: English
• Keywords: unequally bounded rationality, rationality-allocation, markets, government, economic policies
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; I - Health, Education, and Welfare > I0 - General; D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact; P - Economic Systems > P5 - Comparative Economic Systems > P51 - Comparative Analysis of Economic Systems; D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis; A - General Economics and Teaching > A1 - General Economics > A10 - General

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