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Other procedures: conventional judgement

We have shown that in economics the concept of rationality is problematic. Bounded rationality goes beyond the classical concept of rationality. In very few cases do agents behave according to substantive rationality, since they mainly act in a world of subjective beliefs (Arthur, 1994), where the procedures presented in the previous section do not exhaust the content of the real world. Bounded rationality represents, in fact, a rich psychological world of behavioural ideas and models, which cannot be always demonstrably ordered according to their degree of rationality.

Economists and psychologists also speak of ecological rationality, which goes beyond bounded rationality, since it stresses that agents are adaptive to the social environment in which they act. Ecological reasons describe not only bounded behaviours according to nature and sources of uncertainty in order to produce a choice, but also human interactions that determine conventions, norms and rules (Smith, 2003). It is not our task to analyse this interesting research field. For our purposes, we observe only that in ill-defined situations common sense admits the resort to inductive reasoning, in the form not only of intuitive judgement but also of conventional judgement. Social and economic life is also regulated by conventions, which are patterns of behaviour that are 'customary, expected and self-enforcing' since they are shared and sustained by other people (Young, 1996, p. 105). In Keynesian terms, when agents are aware that their individual judgement is worthless, they 'fall back on the judgment of the rest of the world which is better well informed. That is, [they] endeavor to conform with the behavior of the majority or the average' (Keynes, 1973c [1937], p. 114). In this volume, Hishiyama (Chapter 10, s. 10.4) specifically deals with conventional judgement as a pattern of behaviour in an organized investment market such as the stock exchange.

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