Relation exchange as the model of bounded rationality June 16, 2017 Sung Sup Rhee Emeritus professor at Soongsil University
[email protected] This paper is a preliminary version which is prepared for the presentation at 2017 KEA- APEA conference, July 7-8, 2017. Title: Relation exchange as the model of bounded rationality Author: Sung Sup Rhee/Emeritus professor at Soongsil University/
[email protected] Abstracts: Kahneman (2003) presented the scheme of human cognitive system, which presents the steps of sensory order. Human cognition begins with perceptions, from which intuition comes off as fast, parallel, automatic, effortless and emotional system. Reasoning is slow, serial, controlled, effortful and rule-governed system of cognition. The architecture of rational agent model is built on the unrealistic assumption of single cognitive system which has the logical ability of a flawless system of reasoning. However, upon encountering the need to make decision, individuals are likely to act intuitively because intuition is more accessible than reason, which is at odds with the premise of rational agent model and prompts the launching of empiricism approach (Hume 1739). The process of sympathy and consent may be considered as the conduit between different cognitive systems of different individuals. Then, the relational interactions among individuals, i.e. relation exchange should be conceived as the outcome of sympathy-consent process (Rhee 2012b, 2016b). The fundamentality of relation exchange in comparison with value exchange vindicates the legitimacy of relation exchange as the model of bounded rationality. Keywords Cognitive system, accessibility, sympathy-consent process, relation exchange, open/indeterminate system, bounded rationality JEL code: D01, D03 I.