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Published March 2011 | metadata_only
Journal Article

Complexity and economics: computational constraints may not matter empirically


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.

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© 2011 ACM.

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August 19, 2023
August 19, 2023