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Rational irrationality is not doublethink and does not state that the individual deliberately chooses to believe something he or she knows to be false. Rather, the theory is that when the costs of having erroneous beliefs are low, people relax their intellectual standards and allow themselves to be more easily influenced by fallacious reasoning, cognitive biases, and emotional appeals.
Marketers can take advantage of rational ignorance by increasing the complexity of a decision. If the difference in value between a quality product and a poor product is less than the cost to perform the research necessary to differentiate between them, then it is more rational for a consumer to just take his chances on whichever of the two is more convenient and available.
There are four primary assumptions about human nature that form the foundation of RCT as a model of economic rationalization: 1). the decisions and subsequent behavior of an individual are inherently rational as a result of accurately and logically factoring both the rewards and costs of the proposed choice; 2). the reward will logically and ...
Imagine there's a game where one person is placed in a room and assigned the role of the "sender." A second person in a different room is assigned the role of "receiver." The sender is given $20 ...
Irrational behavior can be useful when used tactically in certain conflict, game and escape situations. The moves of an irrational opponent are not (or only very limitedly) predictable. An irrational negotiator cannot be put under rational pressure. [52] An indirect tactic is the rational use of the irrationalism of third parties.
Caplan refers to the make-work bias as a "tendency to underestimate the economic benefits from conserving labor." [1]: 40 Caplan claims that there is a tendency to equate economic growth with job creation. However, that is not necessarily true, since real economic growth is a product of increases in the productivity of labor.
However, irrationality is not always viewed as a negative. Much subject matter in literature can be seen as an expression of human longing for the irrational. The Romantics valued irrationality over what they perceived as the sterile, calculating and emotionless philosophy which they thought to have been brought about by the Age of ...
New institutional economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the social and legal norms and rules) that underlie economic activity and with analysis beyond earlier institutional economics and neoclassical economics.