'BUT CAN'T WE GET THE SAME THING WITH A STANDARD MODEL?' RATIONALIZING BOUNDED-RATIONALITY MODELS

This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be 'rationalized' by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, rationalizing models tend to come with unwarranted 'extra baggage'. I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of bounded-rationality models. -I am not the Messiah, would you please listen, I am not the Messiah, do you understand? Honestly! -Only the true Messiah denies his divinity. -What? Well, what sort of chance does that give me? All right! I am the Messiah! -He is! He is the Messiah! (Monty Python's Life of Brian)