On the Absorbability of Economic Theories – An Experimental Analysis

Although reflexive phenomena have been widely observed in economics, the analysis of the mechanisms that lead bounded rational individuals to accept and eventually comply as far they could with theoretical prescriptions is still at its beginning.

The point is that even if, in principle, the reflexive implications of social theorizing on the economic actors can never be ruled out, their occurrence actually depends on the understanding, acceptance and coherence between a certain theory and the individual mental models. The recursivity of economic theories and their absorption will therefore differ from case to case, which means that the inquiry of this topic cannot only rely on theoretical speculations but needs to be supported by empirical findings. In particular, the analysis has to address the following issues: (1) how real economic actors perceive the recursive character of economic theorizing; (2) if and under which conditions economic theories affect the behaviour of the economic actors in a self-referential way; and (3) how the self-referentiality of economic theories can be empirically tested.

The experimental part of this study can be conceived as an attempt to approach the wide and complicated field of the recursivity of economic theories and to explore the possibility of testing the validity of such theories relying on their absorbability among bounded rational individuals.

In the first section of this chapter, after some introductory considerations on the experimental method in economics, a possible approach to the experimental analysis of the self-referentiality and absorbability of economic theories will be proposed. In this regard, some related research concerning absorbability and task transcending of satisficing will be discussed. The indicative results of some preparatory attempts at testing the self-referential implications of theories that have been conduced in the form of pilot and classroom experiments will be briefly presented. In consideration of their scarce statistical validity and questionable methodological hygiene, however, extreme caution is advised in interpreting the hints they provide.