In oduc ion
In oking he issue o a ionali y in economics is
jus abou as in ellec ually unique, no el and
exci ing as an a emp o disco e he eal
message o Keynes’s Gene al Theo y. Fo
many economis s, and – ankly – one canno
blame hem, he a ionali y assump ion is a i e
ques ion ha wa an s almos no a en ion. To
compensa e o ha , one canno help bu o use
ap e en ious i le.
In he ollowing ex , I acknowledge he impo -
ance o a ionali y assump ion o any economic
heo izing, bu p opose ha economis s, in an
a emp a explaining a seemingly i a ional
beha io in a ional e ms, a e o en engaging
in a scien i ically no e y use ul logical exe cise.
I ollow some ypical examples o such solu ions
and p esen a mic o-su ey o illus a e hei
possible inapplicabili y. I hen a gue ha his
s a e o a ai s is caused by, and u he con ibu es
o, a neglec o he possibili y o i a ional
beha io , and conclude by emphasizing he
impo ance o allowing he possibili y o olly.
Les he pu pose o his a icle be misunde -
s ood, i is no conce ned wi h he p ecise
meaning o con en o he a ionali y assump ion
(as e.g. Sen does [15]), nei he does i c i icize
he employmen o such assump ion in economic
heo izing. I a he belongs o a adi ion o
a icles eminding us abou de ia ions o lesh-
and-blood economic agen s om he homo
oeconomicus model – a adi ion made wide,
long and e i able by Kahneman (see e.g. [9])
and o he s. My aspi a ion wi hin his adi ion is
modes a bes : o poin o a possible
me hodological slip in he way economis
explica e ce ain phenomena and he economic
consequences o i .
1. The Ra ionali y Assump ion
Economics, i is widely g an ed, is a science
abou he way people make choices and abou
consequences o such choices (e.g. [10]). Any
decision, as opposed o non- oli ional beha io ,
implies a use o eason o jux apose he p os
and cons o a gi en ou e o conduc . This,
howe e , does no mean ha one’s easoning
mus necessa ily be a all imes co ec . The
decision-make may use all his eason, and ye
his decision may none heless u n ou w ong –
bo h ex an e and ex pos .
One commonly acknowledged sou ce o
such e o s is unce ain y. Due o necessa ily
impe ec knowledge o he p esen and u u e
s a es o he wo ld, e e y decision is based on
expec a ions and hese may p o e w ong, hus
making he decision – one ha seemed
pe ec ly co ec ex an e – e oneous ex pos .
The e is, howe e , a di e en cause o
e o . E en i one co ec ly pe cei es bo h
p esen and u u e s a es o he wo ld (i.e. his
expec a ion will ma ch eali y), a decision can
s ill be w ong due o he indi idual being
undamen ally mis aken abou he means
p ope o he achie emen o his ends (i.e.
abou causal ela ions be ween di e en
s a es). His eason may well be elling him ha
ce ain means will lead o he desi ed ends, and
hus his decision is conscious and hough ul,
and – no doub – pe cei ed by he decision-
make as a ional. Ye , he may be mis aken,
con used o simply w ong abou a pa icula
means-ends ela ionship. This is he kind o
si ua ion ha economis s ha e in mind when
hey p oclaim a beha io i a ional – w ong om
he e y beginning, e en ex an e. And,
pe haps, his is p ecisely such beha io ha
o he people would e nacula ly call s upid.
Ekonomie
42014, XVII, 2 DOI: 10.15240/ ul/001/2014-2-001
THE ECONOMICS OF BEING STUPID:
A NOTE ON (IR)RATIONALITY IN
ECONOMICS
Dan ·Èas n˘
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Economics
52, XVII, 2014
E en hough economis s ecognize he
possibili y ha people can make e o s, mos o
hem p e e o in e p e human beha io in
a ional – e o - ee – e ms. The e is a e y
good eason o doing so. In oking he possibili y
o e o is a i ial explana ion heo e ically
applicable in i ually all cases. I is an an i-
scien i ic solu ion, an answe equi ing and
p oducing no use ul knowledge wha soe e . To
any ques ion, “Why is he doing ha ?”, he
uni e sally co ec answe may be ha “He is
jus being s upid!”
The idea o a ionali y is hen an o e ly
impo an one o economics, a leas o i s
main s eam. No because economis s could
no a hom an i a ional decision, bu because i
is a s a ing poin o wha economis s do:
adding o i ial explana ions o phenomena
some non- i ial ones. Thus, wi hou he
concep o a ionali y he e would be no science
o economics.
On he o he hand, i would be mis aken o
suppose ha economics is applicable only o
si ua ions whe e people do indeed ac a ionally,
while ha ing no hing o say abou cases o
people ac ing e oneously. Fi s , hanks o
economics, we a e o en able o sugges
some hing abou he a ionali y o he choice in
he i s place: wi hou economics we would no
be able o ell a a ional om an i a ional one.
This is wha economis s do when hey claim
ha A is no a means ha leads o he
achie emen o he end B. Second, economics
being he science abou consequences o
human decisions, i can poin ou consequences
o i a ional beha io oo. I can claim no only
ha A does no lead o B, bu ha in ac i leads
o C. And ha oo is a use ul knowledge.
The e o e, he p esence o i a ionali y in
human decision making does no s ip economics
o i s use ulness and impo ance. The
a ionali y assump ion only enables economis s
o say much mo e han hey would be able o
wi hou i .
2. The Ques o Ra ional
In e p e a ion: Ra ional Riddles
A emp s o ind a ional explana ion o human
beha io ha e long been pa o good
economics and he p o ided explana ions a e
a guably one o he mos imp essi e kinds o
economics’ ou pu o laymen and he mos
enjoyable ones o economis s hemsel es. In
he absence o a s aigh o wa d maximizing
explana ion, one can alk abou a ional iddles,
a e m coined by Landsbu g [10, chap e 2].
Howe e , in his ques o a ional
explana ions, some economis s seem o go as
a as o implici ly assume ha he e mus be
a a ional explana ion o e e y human beha io
we obse e and hey de o e g ea ime and
ene gy owa ds disco e ing i . In his way, an
economic, o a ional, iddle was bo n and i
emains o be economis s’ pas ime agenda –
some hing o alk abou e en when hey ge
i ed o wo king on hei eg essions o o
calib a ing hei models.
The a ional iddles esea ch p og am is
ascina ing in mo e aspec s han jus in i s
sophis ica ion and in en i eness. I wan o
poin ou wo o hem ha ela e o he scien i ic
alue o he solu ion and i s a ailabili y and
es abili y.
2.1 Value o Solu ion
The solu ion o a a ional iddle has a peculia
s a us among answe s ha economic science
can o e . I onically, despi e all he impeccable
economic logic o hese solu ions, hey a e no
likely o be e y aluable o unde s anding how
ou wo ld wo ks. This is because each and
e e y such solu ion (assuming i is o mally
co ec ) can u n ou o be empi ically ei he
co ec o inco ec .
I he solu ion is co ec i means people
whose beha io was examined by economis s
indeed do beha e he way economis s
hypo hesized. This may appea as a g ea
achie emen . In a way, i is and i su ely
demons a es he ingeniousness and in ui ion
o he economis who made ha disco e y. Bu
ha disco e y is ce ainly no as new as one
would assume eal disco e y o be. And his is
because, as ollows om he p emise ha i is
empi ically co ec solu ion o he iddle, he
economic logic o ha beha io (as a p o i -
maximizing s a egy) mus ha e been known all
along o hose who ha e beha ed like ha and
whose beha io only caugh a en ion o
acu ious economis . (I should be clea ha i
agen s we e igno an o he logic, i could no
hen be claimed ha hey a e ac ing acco ding
o i .) The p ac ical use ulness o such solu ion
hen may no ex end much beyond economis s’
men al aining o a signal o an economis ’s
capabili y.
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62014, XVII, 2
On he o he hand, i he p oposed solu ion
is no empi ically co ec , i means ha people
do no beha e he way hey do o he eason
economis s p opose. Despi e being empi ically
inapplicable i s use ulness may be jus abou
he same as he use ulness o he co ec
solu ions (logical exe cise and b ain- easing).
Ei he way, empi ically co ec bu no new,
o jus empi ically inco ec , he same conclusion
applies: wha hese economis s p oduce is an
in ellec ual ea ha adds e y li le o he
knowledge abou how eal-wo ld people
beha e. (The e is one impo an way in which
his conclusion may be sub e ed: i economis s
– ins ead o asking why people do wha hey do
– accep ed om he e y beginning ha people
may ac on i a ional belie s abou means and
unde ook o explain why people’s beha io s ill
su i es. In his se up, economis s migh
indeed disco e how people’s beha io is in ac
e ec i e in b inging abou he desi ed end,
e en i people a e unawa e o i . People may o
cou se imi a e beha io hey ound success ul
wi hou knowing why i wo ks, o , mo e o en,
may ha e e oneous belie s abou why i wo ks.
E olu ion – he na u al selec ion (su i al) on
he ma ke – will p omo e hose who imi a e
such beha io and punish hose who de ia e
om i [1, pp. 217–220], and economis s may in
such cases make uly aluable con ibu ion by
explaining why he mechanism eally wo ks.)
2.2 A ailabili y o a Solu ion
Ano he peculia ea u e o a a ional iddle
solu ion is he ela i e ease wi h which i can be
e i ied, es ed and e en disco e ed in he i s
place.
When ackling he iddles economis s a e
ying o disco e he s a egy o some decision-
make s. When hey p oduce a solu ion, when
hey hink hey did puzzle ou he alleged
pa adox, one would expec hem o double-
check ha hypo hesis wi h he decision-make s
o acknowledge i s co ec ness. I empi ically
co ec , hey would ecei e an a i ma i e
answe (some hing like “yes, you ha e guessed
i !”- ype o a esponse), i no hey would go
ahead guessing.
A e all, asking he e y people whose
beha io is he subjec o examina ion whe he
he explana ion o hei beha io is co ec , is
su ely he easies way o ind ou jus how
ele an and applicable ha explana ion is. Ye ,
he economis s do no seem o be much
in e es ed in aking ha s ep. Ins ead, hey
submi he explana ion as independen om
wha he decision-make s hink and many o
hose alleged pa adoxes a e conside ed by
economis s as un esol ed and wai ing o s ill
mo e ingenious solu ion. This is oughly wha
Dei d e McCloskey calls “Samuelsonian Vice”
[13, pp. 63–69].
In ac , as was poin ed ou abo e, as long
as he iddles ha e a ional solu ions, he e is
no eason o ely on economic scien is s o
come up wi h hem, no ma e how icky and
ingenious i may be. I mus al eady exis in he
heads o hose a ional decision-make s
hemsel es – hey a e beha ing in his way
now. I economis s ha e ha d imes e ealing
wha i is o keep a guing abou me i s o hei
espec i e explana ions, all hey would need o
do o se le he a gumen is o ask he people
who do know.
This is a undamen ally di e en scien i ic
p oblem han he one ackled by na u al
scien is s. They ne e enjoy he possibili y o
ac ually asking he subjec s o hei inqui y
abou why hey beha e he way hey do.
Economis s, on he o he hand, a id o
unde s and people’s beha io , almos always
could. T ying o disco e he answe p io o,
and independen ly o , asking he people whose
beha io economis s s udy could ce ainly
cons i u e an in e es ing discipline in a “bes
economis con es ”, bu may ail o con ibu e
much o unde s anding he ue eali y. (I is ue
ha people may no always speak u h, and
may e en be mo i a ed no o e eal he u h o
p o ec hei business echnology. The pheno-
mena desc ibed as a ional iddles a e so
widesp ead hough ha i would be an as ic o
assume ha an a emp o all i s p ac i ione s o
keep i sec e would e e wo k, much less o
so long. Unbelie able as i is, i is p ecisely his
scena io ha is implied by he economis s’
neglec o con as ing hei ideas o wha
people say.)
3. Riddles Sol ed
To illus a e and subs an ia e such claims I hink
i necessa y o suppo i by looking a some
a ional explana ions o seemingly i a ional
beha io . I ha e chosen h ee popula economic
iddles and oughly mapped he solu ions o
hem sugges ed in economic li e a u e.
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All cases ha e o do wi h p icing. This is
because he e is a common p ejudice ha as
business decisions hey a e mos likely o be
unde aken a ionally as a means o p o i
maximiza ion. The e o e hey cons i u e cases
whe e i makes he bes sense on he pa o
economis s o sea ch o a ional explana ions.
3.1 Popco n O e p icing
Some economis s keep being in igued by he
ac ha popco n cos s allegedly oo much in
mo ie hea es. This is because he p o i
maximiza ion s a egy in his si ua ion would
unde con en ional assump ions en ail jus
ma ginal cos p icing o popco n combined
wi h an acco dingly highe en ance ee. (The
con en ional assump ions include e.g. iden ical
cos ume s’ p e e ences [11, p. 369].) The
au ho s hen look o easons why selling
popco n so dea ac ually secu es highe p o i s
han ma ginal cos p icing o he con en ional
heo y.
All explana ions o his de ia ion om he
expec ed beha io e ol e ound p ice
disc imina ion. They a gue he e is a posi i e
co ela ion be ween p e e ence o popco n
and willingness o pay o he en e ainmen in
he hea e (i.e. o he bundle o wa ching he
mo ies and consump ion o snacks om
concession s ands). Examples o such
easoning a e p o ided by e. g. F iedman
[6, pp. 51–53] o Landsbu g [10, pp. 159–161].
In o de o cha ge mo e o hose who alue
coming o he hea e mo e, i is ound na u al
ha p ice o popco n (soda o o he snacks) will
be aised abo e ma ginal cos while he
en ance ee lowe ed in o de o a ac hose,
who would no o he wise come. (Mo e o mal
analysis is p o ided by Luis Locay and Al a o
Rod iguez [12, pp. 959–960].) Thus, he
puzzling high p ice o popco n is a e all
a a ional p o i -maximiza ion.
The one explana ion he au ho s exp essly
deny happens o be he one ou inely o e ed by
lay people when con on ed wi h his ques ion:
ha he hea e owne jus akes ad an age o
his monopoly on he popco n ma ke wi hin he
hea e . Bu hea e owne s a e lay people, and
he e seems no hing an as ic abou hem doing
i o he same – e oneous – eason as o he
people assume owne s o beha e like ha .
3.2 9-p icing
One o he p ice s a egies ha s ill a ac s
some a en ion among economis s is he
p ac ice o cha ging p ices ending in 9: $5.99
ins ead o $6.00, $79 ins ead o $80 o simila .
(While his iddle also appea s in Landsbu g’s
popula book [10, pp. 10–19], i was inaugu-
a ed in he hall o iddles as ea ly as 1936 [7].
Anecdo ally, such p ac ice is supposed o ha e
o igina ed wi h a Czech shoe p oduce Tomá‰
BaÈa. This may ha e been local in en ion o
in oduc ion, bu , gene ally, hese “jus -below
p ices” i s appea ed in 19 h cen u y a e he
in en ion o a cash egis e .) Highe equency
o 9’s a he end o p ices is su ely suspec in
awo ld o con en ional a ional p icing models.
Wha hen could, acco ding o some econo-
mis s, make businesses choose his pa e n o
p icing o e mo e con en ional – and in a ional
e ms explainable – p icing s a egies? One
eason, p esen ed by Landsbu g, is an
elimina ion o he agency p oblem: employees
a e less likely no o egis e sales i he p ice is
such as o equi e gi ing change back o he
cus ome [10, pp. 15–16]. O he au ho s
specula e e.g. abou quali y signaling p ope ies
o he 9-ending e sus 0-ending p ices [16].
The eason o economis s being puzzled
he e is hei unwillingness o accep he man-
on- he-s ee explana ion: ha 9-ending p ices
a e pe cei ed by consume s as lowe han hey
eally a e, which is why hey buy subs an ially
highe quan i ies. While i is su ely su p ising
and ha d o squa e wi h plain a ionali y ha
people would ou inely ze o in on he numbe s
o he le om he 9 and ound he p ice
downwa d, we should no lose sigh o he ac
ha cus ome s a e men-on- he-s ee . And i
his is wha consume s do, hey may indeed be
doing i o p ecisely his unbelie able eason.
(In ac , s udies o consume choice admi bo h
he possibili y o his beha io on he pa o
consume s [14], and he possibili y o illusion
on he pa o businesses abou he ex en o
which consume s indeed beha e ha way, hus
indica ing an e o on he business side [2].)
3.3 Ticke Unde p icing
Pe haps he mos compelling and impo an o
all iddles a e ins ances o sub-equilib ium
p ices implying sho ages and queues on some
ma ke s. This pu pose ul non-p ice a ioning
akes place o ins ance in selling admission
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82014, XVII, 2
icke s. Why do hea e owne s, conce
p oduce s and o he s cha ge some imes so
li le despi e he ac ha he e is an excess
demand and i seems hey could inc ease he
p ice wi hou selling less and hus inc ease
hei p o i s? He e is wha economis s submi
as gene al solu ions o he selle -induced
excess demand puzzle.
Pe haps mos simply, he e is a conjec u e
ha consume s may pe cei e a ce ain limi o
he p ice beyond which hey would conside he
p ice “un ai ” [8]. Selle s may hen be a aid o
c ossing such h eshold, and choose o li e
wi h he queues.
O , i has been p oposed ha c ea ing an
excess demand may cause a “buying enzy”
wi h consume s being d i en o pu chase
soone han hey o he wise would. This means
ha consume s make less in o med pu chasing
decisions and ha he p oduce can cha ge
highe p ice o people who would no mally
pos pone hei pu chase o become mo e
in o med [5].
Fu he , i has been asse ed ha , in some
cases, inducing an excess demand may be
away o in luence he composi ion o he
audience. As he exis ence o complemen a y
goods o a ending an e en a ies ac oss he
audience, he selle may ind i p o i able o
ade o lowe eceip s om he box o ice o
highe sales o complemen a y goods (CD’s,
ideos, T-shi s and o he pa aphe nalia).
P o ided he a endees who end o buy mo e
complemen a y goods han o he s a e hose
who a e also willing o incu ex a cos o
ge ing hold o he icke s (s anding in line,
buying om scalpe s e c.), selling a lowe -
han-ma ke -clea ing p ice may be a p o i able
s a egy. (This a gumen is a ibu ed o
Kenne h McLaughlin [10, p. 13].)
Finally, and pe haps mos con olu edly, i is
sugges ed ha in case o some goods, he
indi idual demand is dependen on he o al
quan i y demanded on he ma ke . This is said
o lead o a possibili y o an upwa d sloping
demand (wi hin ce ain quan i ies) and a p o i -
maximizing equilib ium a a p ice ha
gene a es excess demand. Such equilib ium is
uns able, howe e , and may be upse by a p ice
hike. In such case, he educ ion o quan i y
demanded migh cause he indi idual demands
o al e and he ma ke o e e o a s anda d
equilib ium a bo h lowe p ice and lowe
quan i y and, consequen ly, lowe he le el o
p o i [3].
An implici assump ion behind all hese
a ionaliza ions is ha , su ely, he selle s ha e
good, p o i -maximizing easons no o aise
p ices, no as he con en ional wisdom would
ha e i : ha lines a e a consequence o he
p oduc o be o limi ed a ailabili y. Bu would i
be impossible o he icke selle s o sha e
such con en ional wisdom?
4. Solu ions Tes ed
Some o he abo e explana ions may ha e hei
me i s and p esumably may be applicable as
solu ions o he pa icula iddles, e en i on
alimi ed scale: ai ness cons ain s ela e
mos ly o si ua ions o p ice gouging; buying
enzies a e es ic ed o new p oduc s;
complemen a y goods may be impo an in
case o some conce s o spo s games, bu a e
ha dly p esen e e ywhe e whe e he e a e
lines. Many o hem, howe e , a e based on
such complex economic easoning ha he e
seems o be some g ounds o doub ing hei
eal-wo ld plausibili y. I would be ai hen o
pu hese solu ions o es , pa icula ly i he es
is easie han i seems – all ha needs o be
done o sol e hese mys e ies once and o all
is o go and ask he people whose beha io
economis s specula e abou .
Now, su p isingly, his is no happening.
Economis s keep ying o cons uc heo e ical
explana ions, bu nobody seems o ha e gone
o mo ie hea e owne s o ask hem o wha
deg ee hey conside hei cus ome s di e en
and wha hey hough o he co ela ion
be ween willingness o pay o seeing mo ies
and consump ion o popco n. Has someone
asked he selle s wha hey signal wi h he “jus -
below” p ices hey cha ge? Has anybody gone
o he Becke ’s Palo Al o sea ood es au an
and con i med ha he owne indeed assumes
he indi idual quan i y o his p oduc s
demanded depends on he agg ega e quan i y
demanded? (The e we e s udies asking he
selle s whe he hey cha ge such p ices, bu ,
as onishingly, no why. In ac , S i ing s a s by
ci ing a mul i ude o s udies om 1954 ill 1997
ha es ablish he ac ha such p ices a e
indeed cha ged by asking he company
manage s [16, p. 1618], and hen spends his
whole a icle on hypo hesizing when and why
hey do so. Landsbu g, on he o he hand,
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92, XVII, 2014
sugges s o es his idea abou agency p oblem
by es ing he hypo hesis ha “99-cen p icing
should be less common in s o es whe e he
owne s wo k he cash egis e ” [10, p. 16].)
In o de o close his empi ical oid, we ocused
on he p oblem o icke unde p icing, and
in e iewed head manage s o h ee pe o mance
hea e s in P ague. All o he hea es a e
in amous o lines a hei box o ices, anging
om single hou s o o e nigh wai ing ime. We
asked all o hem abou he causes o he lines,
abou he in luence o p ice on hei p o i and
easons o no inc easing he p ice.
The su ey was conduc ed in No embe
and Decembe 2007 as in e iews in pe son
(wi h one excep ion). Besides h ee hea es i
included o he businesses as well: 2 es au an s,
2 hai s udios, 1 ice-hockey club and 1 conce
p oduce (in e iewed o e phone). The common
denomina o o all he non- hea e cases was
ha he lines seemed o be a p oduc o
impe ec o esigh and isk a e sion and would
hus no be classed as a ional iddles. Fo his
eason I do no ep oduce he in e iews he e
and limi mysel o hea es only.
4.1 Thea e A
In he i s hea e (A), he managemen
pe cei es lines as a p oblem and epea edly i
ies o add ess hem. In ac , he head
manage admi ed ha had she been a egula
hea e isi o , she would ha e ne e a ended
any o he pe o mances he e as she ha ed
s anding in lines (emphasis added).
The answe o a s aigh o wa d ques ion
abou he causes o lines was, unwa e ingly,
ha he numbe o sea s is oo small o
accommoda e all he people who would like o
come. The way hey ha e deal wi h he lines
was o a) keep hei box o ice as he only icke
dis ibu ion channel, and b) limi he numbe o
icke s an indi idual is allowed o pu chase o 4.
Bo h a) and b) we e designed o p e en
second-hand dealings wi h pu chased icke s,
which was expec ed o make su e “ he
pe o mance would be a ended by as many
people who wan o come as possible”. As his
numbe can ha dly change due o he ixed
numbe o sea s, she migh ha e possibly
mean ha he audience composi ion would be
a ec ed by he p ice. Indeed, la e in he
in e iew she b ie ly men ions hey “a e no
in e es ed in snobbish audience.”
Only when explici ly cued, he head
manage eluc an ly admi ed he possible ole
o icke p ices bu poin ed ou immedia ely ha
people could no a o d i hen. She commended
he ac people had ne e complained abou
p ices and hough ha aising he icke p ices
would o ce hei cus ome s o limi he numbe
o icke s hey buy in hei li e ime. And his, as
she emphasized, was no he goal o he
hea e .
4.2 Thea e B
In he second hea e (B), oo, he manage has
a“simple” explana ion o he lines: he numbe
o people in e es ed in coming is g ea e han
he hea e capaci y and “people ha e o,
na u ally, come ahead o ime”. He hough his
sys em is jus bu es ic i e a he same ime
as i elies on limi s on pu chases and does no
allow ese a ions, which, he admi ed, is
pa icula ly exing o people ou side o
P ague. They a e no awa e o , and hus a e
no conce ned abou , second hand dealings
wi h icke s. When asked wha hey would do i
hey knew i was happening, he head manage
poin ed o possible way o inc easing he
anspa ency such as “in o ming he people
abou he numbe o icke s”.
The ques ion o icke p ices had o be
b ough up explici ly by he in e iewe . The
answe was unce ain, indica i e o no p io
conside a ion and o con usion be ween all
possible e ec s. P ices, on he one hand, he
asse ed, “would ha e no e ec on he numbe
o people who buy he icke s”. This should no
be oo su p ising as he numbe o sea s is
ixed. Wha he p obably mean was ha he
quan i y demanded ( he numbe o people who
wan o buy) would no be a ec ed.) E en i
hey had an e ec , he wen on, people would
esen seeing p ices inc eased. On he o he
hand, almos immedia ely, he added he e
migh be some oom o p ice inc eases. A he
end, he low p ices (and he lines) we e
a ionalized as a means o secu ing a “g ass-
oo ” composi ion o he audience.
4.3 Thea e C
Las ly, he in e iew wi h he ope a ions di ec o
o he hi d hea e (C) had almos an iden ical
plo . She claimed hey ha e lines because
people like wha hey do and hei audi o ium
space is limi ed. When maneu e ed o he
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10 2014, XVII, 2
possible ole o p ices, she hough i was o
seconda y impo ance. On he o he hand, she
e ealed ha hey had inc eased hei p ices
and do so e e y yea , and admi ed hey y o
e lec he demand o hei pe o mances. On
ye ano he hand, hough, she added ha he
p ice inc eases we e necessa y due o he
ope a ion cos and ha he g owing demand
was some hing ha enabled hem o pass he
cos o he audience, mo e han being
amo i a ion o p ice inc eases. Finally, she
con adic ed his by admi ing ha e.g. be o e
Ch is mas hey o e gi icke s a highe p ices
and cha ge highe p ices o pe o mances
no o ious o he lines. She no ed ha he lines
ha e been educed by “almos a hal ” o hei
p e ious leng hs, and a ibu es his mainly o
he p ice inc eases, possibly suppo ed by
asys em o in e ne ese a ions.
I would be wholly imp ope o conside his
mic o-su ey as obus ly exploding he whole
iddle-solu ion- esea ch p og am. I s esul s
a e, howe e , s ill o in e es as hey do no
exac ly pain a pic u e o he hea e manage-
men doing some hing e en emo ely as
sophis ica ed as he economic heo is s sugges .
And i is no he lack o igo ous economic
hinking on he pa o he hea e manage s
and hei ailu e o use he e y language and
concep s o p o essional economis s. I is ha
he in e iews e eal p ecisely he ype o
economic hinking economis s ule ou be o e
hey s a hei hinking abou he p oblem,
which is why hey no only end up, bu al eady
s a wo king in, a di e en wo ld.
No esponden s on hei own e en linked
he exis ence o lines wi h he p ices, much less
wi h p ices being “ oo low”. Ins ead, all o hem
hough i had o wi h sca ci y, as i o he hings
in he wo ld besides hea e icke s we e no
sca ce. E en when p omp ed abou he p ices,
he immedia e eac ion was – wi h he possible
excep ion o C – ha his would no wo k
because people would no be able o a o d i ,
as i he low p ice made he icke s somehow
gene ally mo e a ailable. (Gi en he ac ha
hea e C showed subs an ially less puzzling
beha io – hey do adjus p ices acco ding o
demand, and e ec i ely manage o sho en
hei lines – i may be o in e es o men ion ha
he manage o C was a uni e si y g adua e
wi h some economic educa ion. The o he
manage s ( hose o A and B) we e non-
business, a s educa ed pe sons. This would
coincide wi h indings ci ed by B yan Caplan on
he – qui e unsu p ising – nega i e co ela ion
be ween economic educa ion and he le el o
biases abou economics [4, pp. 50–93]).
Some o he o he esponses seduce one o
a ional in e p e a ion: e.g. he idea ha people
would esen p ice inc eases may sound like
Kahneman e al. and hei concep o ai ness
cons ain [8]. O , he in luence o p ice on he
audience composi ion ings a somewha
a ional bell. Howe e , nei he o hese is
asu icien eason o no aising he p ices and
bo h a e much mo e likely o be ele an unde
al e na i e – non-p o i -maximiza ion – schemes.
(The hea e manage s may know ha buye s
will esen he p ice hikes, and s ill i may be
mo e p o i able o do so. Simila ly, e en i he
hea e manage s and ensemble p e e he so
o audience made o people who can pu up
wi h s anding in he line o e nigh , bu s ill i
may be mo e p o i able o ha e highe p ices
and “wo se” audience. In hese si ua ions, hei
decision no o aise p ices will hen be
economic only as long as hei u ili y unc ions
include eel-good a gumen s such as public
app o al, o ond ela ions wi h he audience.)
As will be ecalled, howe e , he economis s’
solu ions o iddles a e p o ided as a ionaliza-
ions o lines unde p o i -maximiza ion
assump ion – o he wise he explana ions would
be conside ed as i ial impu a ion o beha io
(means) igh in o he goals (ends). Ei he way,
uly sophis ica ed solu ions like he one o e ed
by Becke [3] seem somewha i ele an in he
con ex o he business hinking he in e iews
a emp o documen . Unless, o cou se, one is
o a gue ha he manage s did no wan o
disclose hei eal s a egies, and jus “played
s upid” ins ead. Unlikely as i is, i b ings me
inally o he economics o being s upid.
5. When he S upid Comes In
We ha e seen abo e ha he e is in ac an
easy way o es he empi ical ele ance o
economis s’ solu ion o a ional iddles: by
asking he e y people whose mo i es hey
ha e ied o second-guess. We also saw ha
such su eys a e unbelie ably a e i no non-
exis en . Bu e en i hese su eys we e
unde aken, hey would a bes p oduce a logic
ha was al eady known and p ac iced, e en i
no o mally desc ibed on pages o an
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112, XVII, 2014
economic jou nal. Tha migh no be exac ly he
bes use o economis s’ in ellec ual capaci y,
bu a leas i would p o e he empi ical powe
o he discipline (and, p esumably, made some
economis s p oude o hemsel es).
When, on he o he hand, he solu ions p oposed
by economis s a e ound empi ically i ele an ,
i may only mean one o he ollowing: a) no
economis s co ec ly guessed wha businesses
a e up o ( he game may p oceed), o b) no such
u he solu ion exis s as he puzzling beha io is
indeed and simply a p oduc o i a ional hinking
he economis s e used o accep in he i s
place. I s i iali y no wi hs anding, his e en uali y
may be empi ically e y ele an and impo an .
I economis s choose o banish he
possibili y o i a ionali y, hei unde s anding o
wha is going on is impai ed. Wha looks like an
ou wi ing game wi h no social consequence is
jus a ip o he icebe g – he economis s’
de e mina ion o insis on a ionali y may c ea e
imagina y puzzles whe e he e a e none and
hus di e hei sca ce in ellec ual esou ces
om a eas whe e hey a e mo e needed.
One a ea ha was hi pa icula ly ha d by
esis ance o i a ionali y is he economics o
policy-making. B yan Caplan’s book, compiling
and w apping up his esea ch p ojec o he
pas decade o so [4], shows qui e con incingly
ha a emp s o explain pe sis ence o oolish
public ha e sys ema ically shunned he
possibili y o he elec o a e being mis aken in
unde s a ing he impac o he policies. Poli ical
p ocess, pe e ed as i may be, does no
explain away all he public policy oolishness. I
democ acy p oduced policy ha people eally
liked, i would ha e been e en mo e oolish
han i is. Caplan poin s ou how much he
ideas o he public a e sys ema ically biased
compa ed o wha economis s hink. Indeed,
my indings in he hea e su ey – he lack o
app ecia ion o he ole o p ices – allies
di ec ly wi h he biases he was able o iden i y.
He hus shows ha he olly o he elec o a e
may be he missing piece in he puzzle. Tha
he a emp s o s anda d public choice heo y o
accoun o pe sis ence o bad policies ha e
been ailing and ha e p oduced con olu ed and
useless heo e ical wo k p ecisely because
economis s in he pas cen u y – unlike some o
he cen u y be o e ha – u ned a blind eye o
he possibili y o human olly. As Caplan
concludes his book:
Social science has pu sued many blind
alleys – and igno ed many p omising ones –
ou o misguided insis ence ha e e y model be
a“s o y wi hou ools,” e en in a eas like
poli ics whe e olly is cen al. A p o e b ells us
ha “a wise man lea ns mo e om a ool han
a ool lea ns om a wise man.” By closing hei
eyes o ools and olly, he wise men o social
science ha e a i icially hobbled he ad ance o
hei own lea ning. [4, p. 209]
Conclusion
The pu pose o his a icle was wo- old.
Fi s , I wan ed o b ing a en ion o wo s ange
ea u es o economis s’ esea ch p og am. When
economis s specula e abou why people’s
beha io is a ional (which is wha hey do when
c acking he a ional iddles), he esul o such
scien i ic e o – all i s sophis ica ion,
ingeniousness and o mal impeccabili y
no wi hs anding – is ei he co ec , bu no new
(i.e. i has been known be o e o he examined
people), o simply w ong in he sense ha he
solu ion does no apply (i.e. i is empi ically
emp y). Ei he way, he signi icance o such
science seems compelling bi limi ed. Mo eo e ,
his is jus as s ange as he way h ough which
economis s ypically y o es he empi ical
alidi y o hei esul s. Tes ing hypo heses
implied by he esul s can, o cou se, shed
much ligh on ha ques ion, bu since hei
esul s ela e essen ially o a ques ion o why
people do wha hey do, i is he examined
people who can se le he issue. While da a can
alk, so can he people.
Second, I sugges economis s may be
somewha uneconomical in hei esea ch
e o s. By insis ing on models wi h a ional
ac o s only, hey may emba k on a acuous
a ional iddles esea ch p ojec in he i s
place. And h ough hei isola ion om he
people hey examine, hey ail o ind ou ha in
many cases he a ional iddle solu ion does no
exis , and ha he beha io hey specula e
abou is a p oduc o con usion and olly, ha i
is simply i a ional.
This is in no way a plea o disca ding he
a ionali y assump ion in economics. I is only
aplea o emembe ing ha i is an assump ion
ha may jus as well no be me . By heeding i ,
economis s can economize on hei sca ce
esea ch esou ces, and pe haps de o e mo e
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12 2014, XVII, 2
o hem o, and do an e en be e job in, a eas
whe e such assump ion holds.
The au ho would like o hank Jose
Mon ag o commen s and adminis a ing and
p ocessing he mic o su ey, and o Da id
Lipka and Ed S ingham o aluable commen s
on p e ious e sions o he ex . O he s
Ichoose o lea e unmen ioned les someone is
le ou . The usual ca ea applies.
Re e ences
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[14] SCHINDLER, R.M., KIRBY, P.N. Pa e ns o
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Dan ·Èas n˘
Jan E angelis a Pu kynû Uni e si y
in Ús í nad Labem
Facul y o Social and Economic S udies
Depa men o Economics
[email p o ec ed]
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