Redefining Reality - The Intellectual Implications of Modern Science

scale relations, which were based on the picture of the rational,
self-interested agent. Keynes showed that the macro-level picture
has emergent properties. He suggested that we need to talk about
macroeconomic phenomena in a macroeconomic language, which
cannot be reduced to microeconomic occurrences.
The middle of the 20 th century forced us to reevaluate the second
of the two presuppositions of economics: that the workings of the
small could account for the workings of the large in the economy.
Then, the end of the 20 th and the beginning of the 21 st centuries saw
interested beings in the marketplace.
There is little doubt that we are neither fully rational in all elements
of our lives nor entirely self-interested. But the notion of homo
functioned in microeconomics as one of Max Weber’s
ideal forms. It was an idealization that was close enough to reality
that it could be used as a meaningful lens through which to make
sense of what we see in the marketplace.
But modern psychology has shown that we often make decisions
on completely nonrational bases. The amygdala leads us to act
blanks with a story about how we reached a decision to act through
thoughtful deliberation.
Economists have shifted gears in order to catch up with
psychological research, giving rise to .
matters; indeed, we are programmed not to. The effects of social
psychology—groupthink, cognitive biases, and comparative
Sociological aspects, such as the status quo bias and availability
bias, are involved, as well.
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