Is Bounded Rationality in Entry Decisions Necessarily Bad for Social Welfare?. (December 2016)

• Record Type: Journal Article
• Authors: Gal, Michal S.
• Other Names: Gundlach Gregory T. guest-editor.; Moss Diana guest-editor.
• Is Part Of: Antitrust bulletin. Volume 61:Number 4(2016)
• Page Start: 541
• Page End: 545
• Publication Date: 2016-12
• Subjects: antitrust -- competition -- competition law -- innovation -- rationality -- bounded rationality; Antitrust law -- United States -- Periodicals; Restraint of trade -- United States -- Periodicals; 343.73072105
• DOI: 10.1177/0003603X16676141
• Languages: English
• ISSNs: 0003-603X

Abstract

In the article Boundedly Rational Entrepreneurs and Antitrust, Professor Tor provides an excellent overview of the effects of bounded rationality on the behavior of entrepreneurs in the marketplace. In this short note, I offer some observations on the article. In particular, it suggests several additional parameters that might be worth exploring before we can reach a conclusion about the role that bounded rationality plays in economically irrational entry decisions. It also suggests some factors that should be weighed before determining whether irrational entry is socially harmful. Finally, the note provides several observations with regard to regulation, including the effects of algorithmic applications on bounded rationality decisions by entrepreneurs.