Why do economists insist on assuming that people behave rationally, when such an assumption is clearly false?
What will be an ideal response?
All scientists make false assumptions-assumptions are needed to simplify real-world problems and make them tractable. A large part of learning to be an economist (or any other scientist) is learning how to choose simplifying assumptions that lead to models that have interesting results, are testable, and are robust. Economists have found that the assumption of rational behavior is one such simplifying assumption. It generally leads to robust models, because the same results would often occur in a more realistic world where there are no unexploited profit opportunities. The rationality assumption also prevents the economist from simply dismissing any human behavior that on the surface appears illogical or irrational-the rationality assumption instead forces the economist to examine and explain these situations.
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