Rationality in psychology and economics
Article Abstract:
The psychological and economic definitions of rationality are compared. Economic studies usually assume that human behavior is rational, while psychology classifies behavior into categories of rational and irrational. The substantive theories of rationality that are held by neoclassical economists lack an empirically based theory of choice. Procedural theories of rationality, which attempt to explain what information people use when making choices and how information is processed, could greatly improve the descriptive and forecasting ability of economic analysis.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1986
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Adaptive behavior and economic theory
Article Abstract:
The role of adaptive elements in empirically derived economic theories is discussed. The hypotheses of rationality and adaptation are seen to be complementary. Stability theories that have their foundation in adaptive behavior can be used in some economic models to narrow the range of empirically interesting equilibria. Examples are used to illustrate this concept, and an experiment to test this idea is proposed.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1986
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Rationality of self and others in an economic system
Article Abstract:
In economic theory, rationality is not simply an individual property; much of its meaning derives from the social context of the economic model. For rationality hypotheses to work effectively, there must be not only pure but perfect competition. Under anything less than ideal conditions, rationality assumptions are severely strained, and in some cases, purely rational conclusions contradict observable phenomena.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1986
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