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A criticism of the paradigm of rational choice in uncertain conditions through the lens of behavioral economics

Jaroslav Dachel, Eva Duchácková, Jarmila Radová

Abstract: The authors of the article point out that the classical theory of economics has failed to yield a solid theoretical background for the economic conditions of the world. Theorists cannot look to controversial mathematical modelling for help, especially due to the influence of unfettered randomness. Heuristic economists and empiricists can better anticipate the consequences of chance for the economic conditions of the world and better interpret the behaviour of individuals and economic entities in decision-making in uncertain conditions, which seems to be an altogether different case. The classical utility theory is criticized. The authors emphasise the particularity of the insurance industry and controversial regulatory projects in this context. The fair insurance premium is criticised. Conclusion: The challenge for today’s theoretical economists is to find a new concept for today’s global era in line with behavioural and empirical approaches. 

Additional Info

  • Author(s) Name: Jaroslav Dachel[1], Eva Duchácková[1], Jarmila Radová[1]
  • Author(s) Affiliation: [1]University of Economics, Prague, Department of Banking and Insurance
  • Corresponding author: This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Keywords: paradigm of economics, the utility theory, behavioural and empirical approach, unfettered randomness, particularity of the insurance industry, criticism of the fair insurance premium
  • Article Type: Research
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