It even fails
to account for simpler forms of apparent selflessness, such as
reciprocal altruism (motivated by hopes of reciprocal benevolent
treatment in the future).
Even the authoritative and mainstream 1995 "Handbook of Experimental
Economics", by John Hagel and Alvin Roth (eds.) admits that people do
not behave in accordance with the predictions of basic economic
theories, such as the standard theory of utility and the theory of
general equilibrium. Irritatingly for economists, people change their
preferences mysteriously and irrationally. This is called "preference
reversals".
Moreover, people's preferences, as evidenced by their choices and
decisions in carefully controlled experiments, are inconsistent. They
tend to lose control of their actions or procrastinate because they
place greater importance (i.e., greater "weight") on the present and
the near future than on the far future. This makes most people both
irrational and unpredictable.
Either one cannot design an experiment to rigorously and validly test
theorems and conjectures in economics - or something is very flawed
with the intellectual pillars and models of this field.
Neo-classical economics has failed on several fronts simultaneously.
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