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Complexity and economics: computational constraints may not matter empirically

Echenique, Federico and Golovin, Daniel and Wierman, Adam (2011) Complexity and economics: computational constraints may not matter empirically. ACM SIGecom Exchanges, 10 (1). pp. 2-5. ISSN 1551-9031.

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Recent results in complexity theory suggest that various economic theories require agents to solve intractable problems. However, such results assume the agents are optimizing explicit utility functions, whereas the economic theories merely assume the agents' behavior is rationalizable by the optimization of some utility function. For a major economic theory, the theory of the consumer, we show that behaving in a rationalizable way is easier than the corresponding optimization problem. Specifically, if an agent's behavior is at all rationalizable, then it is rationalizable using a utility function that is easy to maximize in every budget set.

Item Type:Article
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Echenique, Federico0000-0002-1567-6770
Additional Information:© 2011 ACM.
Subject Keywords:Rationalization, Bounded Rationality
Series Name:Social Science Working Paper
Issue or Number:1
Classification Code:Categories and Subject Descriptors: F.2.0 [Theory of Computation]: analysis of algorithms and problem complexity–general; J.4 [Social and Behavioral Sciences]: Economics
Record Number:CaltechAUTHORS:20160321-131503486
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Official Citation:Federico Echenique, Daniel Golovin, and Adam Wierman. 2011. Complexity and economics: computational constraints may not matter empirically. SIGecom Exch. 10, 1 (March 2011), 2-5. DOI=
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65540
Deposited By: Susan Vite
Deposited On:31 Mar 2016 23:27
Last Modified:26 Nov 2019 11:15

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