October 28, 2022 10:00am-11:00am | On the Obsolescence of Long Run Rationality
Posted in: Work in Progress
David Axelrod, Economics, Feliciano School of Business, MSU
https://montclair.zoom.us/j/6188722538
The rapid pace of technological change challenges assumptions concerning the economic “long-run”. Consequentially, it disrupts the optimal psychological balance of emotion, reason, intuition and faith in our decision making. This is described in terms of the microeconomic conception of “runs”, decision frames defined by the scope of what is variable in the production process and endogenously determined. The four types are: immediate, short, long and very long. These relate to time horizons that have parallels in terms of mindsets and the production of experiences. We show how a decrease in time between tech advances causes a sublimation from the short-run to the very long run, thereby making long-run analysis obsolete. Further, based on a “certainty principle”, these changes are associated with increased uncertainty about the future, which are associated with increasing myopia. This can trigger a substitution out of reason into either emotion-based and/or intuition-based choice, as well as a greater demand on faith to maintain behavior. The implication is an exaggerated bifurcation in society between people driven by emotions to mediate the moment, and those reliant on vision and faith in technological progress to make their plans seem reasonable.
