Origin of Predictable Behavior: Further Modeling and Applications
Economic theory is founded on the assumption that agents act as if they are able to maximize according to well-behaved preferences, regardless of how complex their decision problems might be. Consequently, the theory has never investigated the consequences of a genuine gap between an agent's decision-making competence and the difficulty of a decision problem (called a C-D gap). In a recent paper (1983; hereafter called the paper), I outlined a general theory for investigating the latter possibility. A major theme was that recurrent pattern in behavior arises because of decision-making uncertainty due to a C-D gap; so that uncertainty becomes the basic source of predictable behavior. Here I discuss certain theory topics that were only sketched in the Origin paper, and briefly suggest a few related applications. To pursue these objectives, I begin with a short restatement of the reliability condition introduced in the Origin paper.
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