In discussing rational choice theory (RCT) as an explanation of demand behavior, Becker (1962) proposed a model of random choice in which consumers pick up a bundle on their budget line according to a uniform distribution. This model has then been used in various ways to assess the validity of RCT and to support as-if arguments in defense of it. The paper makes both historical and methodological contributions. Historically, it investigates how the interpretation of Becker random behavior evolved between the original 1962 article and the modern experimental literature on individual demand, and surveys six experiments in which it has been used as an alternative hypothesis to RCT. Methodologically, the paper conducts an assessment of the as-if defense of RCT from the standpoint of Becker’s model. It argues that this defense is “weak” in a number of senses, and that it has influenced negatively the design of experiments about RCT.
Becker random behavior and the as-if defense of rational choice theory in demand analysis
MOSCATI, IVAN;
2011
Abstract
In discussing rational choice theory (RCT) as an explanation of demand behavior, Becker (1962) proposed a model of random choice in which consumers pick up a bundle on their budget line according to a uniform distribution. This model has then been used in various ways to assess the validity of RCT and to support as-if arguments in defense of it. The paper makes both historical and methodological contributions. Historically, it investigates how the interpretation of Becker random behavior evolved between the original 1962 article and the modern experimental literature on individual demand, and surveys six experiments in which it has been used as an alternative hypothesis to RCT. Methodologically, the paper conducts an assessment of the as-if defense of RCT from the standpoint of Becker’s model. It argues that this defense is “weak” in a number of senses, and that it has influenced negatively the design of experiments about RCT.
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