The Rationality of Selecting Irrational Decision Makers

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Supervisors: Vannetelbosch, Vincent
Faculty: Faculté des sciences économiques, sociales, politiques et de communication
Degree label: Master [120] en sciences économiques, orientation générale
Abstract: In the behavioral economics literature, rationality of groups has received a particular attention those two last decades. The main message of the literature is that groups’ behavior is closer to the standard assumptions of rationality than individuals’ ones with a non-trivial impact of the decision rule on this result. Yet, it must be noticed that underlying experiments have been conducted with exogenously formed groups and few contact between groups. This work offers a new environment with firstly heterogenous rationality levels similar to the level-k theory and secondly a sort of one-way transparency about the levels, this is called later the Variant of the level-k theory. In this framework, this essay tries to forecast the impact of letting rational agents form groups themselves, i.e. endogenously. The model reveals that in some specific situations, it might be optimal to select irrational decision makers and, as a corollary, that groups’ behavior may then be less rational than the one of individuals.