About the Talk
The standard rationality assumptions of neoclassical economics were consciously adopted as unrealistic. They were designed to create “puppets” that would give utility functions a firm axiomatic foundations and generate determinate market behavior. Behavioral economics treats these puppet characteristics as a normative ideal by which the behavior of real-world individuals is to be judged. When individual behavior is found wanting by this standard, the object of behavioral policy is to make people behave like neoclassical puppets. This is a grave mistake which will be discussed and illustrated.
About the Speaker:
Mario Rizzo is the Co-Director of the Classical Liberal Institute and an Associate Professor of Economics at NYU. He is also the Director of the Program on the Foundations of the Market Economy in the Department of Economics and the chairman of the Colloquium on Market Institutions and Economic Processes. He has been a law and economics fellow at Yale Law School and the University of Chicago Law School. He has published in both law and economics journals. He is the author (with Gerald P. O’Driscoll, Jr.) of Austrian Economics Re-Examined: The Economics of Time and Ignorance.
Most recently, he is also the author (with Glen Whitman) of Puppets and Puppet Masters: Rationality, Behavioral Economics and Paternalism to be published by Cambridge University Press in 2019.
His research is grounded on four fundamental premises: (1) the decentralization of knowledge in a complex society is important in the explanation of both economic and social phenomena; (2) human action should be understood in a contextual way — both individual and social context is needed to make sense of what people do and how they relate to one another; (3) these phenomena are best viewed as processes in time; and (4) economic and social policies usually have important unintended consequences.