A Liberal Challenge to Behavioral Economics: The Case of Probability
This paper argues that the Behavioral Economics movement (BE for short) needs to be liberally inclusive in formulating the criteria for rationality against which to evaluate people’s cognitive ability and performance. It is illiberal to require that individuals use a single cognitive methodology where more than one sound methodology is available. This prescription is appropriate both for evaluating people’s probabilistic reasoning and for studying people’s utility valuations. This paper focuses primarily on BE’s assessment of people’s probabilistic performance. Specifically, it examines the famous “Blue Cab” experiment upon which several behavioral studies have grounded their assessment of an average per-son as “probabilistically challenged.”
