Topic
Rationality
About: Rationality is a research topic. Over the lifetime, 20459 publications have been published within this topic receiving 617787 citations.
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TL;DR: In this paper, the authors examine the effect of money illusion and anchoring on the adjustment of nominal prices after an anticipated monetary shock and find that the adjustment difference is driven by price expectations, which are very flexible and forward-looking under substitutability but adaptive and sticky under complementarity.
Abstract: Much evidence suggests that people are heterogeneous with regard to their abilities to make rational, forward-looking decisions. This raises the question as to when the rational types are decisive for aggregate outcomes and when the boundedly rational types shape aggregate results. We examine this question in the context of a long-standing and important economic problem: the adjustment of nominal prices after an anticipated monetary shock. Our experiments suggest that two types of bounded rationality— money illusion and anchoring—are important behavioral forces behind nominal inertia. However, depending on the strategic environment, bounded rationality has vastly different effects on aggregate price adjustment. If agents’ actions are strategic substitutes, adjustment to the new equilibrium is extremely quick, whereas under strategic complementarity, adjustment is both very slow and associated with relatively large real effects. This adjustment difference is driven by price expectations, which are very flexible and forward-looking under substitutability but adaptive and sticky under complementarity. Moreover, subjects’ expectations are also considerably more rational under substitutability.
112 citations
TL;DR: In this article, the authors track the effects of an accounting-based intervention in a rationalized lifeworld that is constituted by three cultural spheres with their associated modes of rationality (instrumental, moral and aesthetic).
Abstract: Accounting research is beginning to concern itself with mapping the operation of accounting in specific empirical settings. This paper has a similar aim — to track the effects of an accounting-based intervention in a rationalized lifeworld that is constituted by three cultural spheres with their associated modes of rationality —instrumental, moral and aesthetic (Habermas, J., The Theory of Communicative Action , Vol. 1, Heinemann, 1984). The institutional setting chosen is the U.S. health-care industry and the empirical event focused upon is the introduction of a prospective payment system in 1983. The empirics raise some interesting suggestions for future research. It appears that accounting struggles as an instrumental technology but enables action by providing a way out of moral dilemmas and in so doing enacts substantive power effects upon human bodies, both individual and collective.
112 citations
TL;DR: The resilience of this approach lies in its being imbedded in a more general and unquestionably accepted definition of the slum population as culturally primitive and, hence, most frequently irrational.
Abstract: The peripheral slum population in urban Latin America is still characterized, despite much research to the contrary, as a focus of discontent and political disruptiveness. The resilience of this approach lies in its being imbedded in a more general and unquestionably accepted definition of the slum population as culturally primitive and, hence, most frequently irrational.
112 citations
TL;DR: The case raises issues on which conditions are enabling or hindering written procedures to be perceived as a tool at the service of safety.
112 citations