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Interpretations and Theoretical Uses of the Concept of Rationality in Economics

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  • Óscar Eduardo Pérez Rodríguez

Abstract

Economic theory has focused on trying to account for the behavior of agents and the results that such performance will have in aggregate terms. Using several assumptions theory has come to build agent archetypes, in search for the most appropriate and possible representation for such behavior. One of the least analyzed but fundamental assumptions are related to the rationality. This term has had different definitions. At first it was treated as a simple capability of reasoning, then it gradually turned into the idea of a gifted agent able to construct sophisticated models in his/her mind (hyper-rational), to finally result in the idea of a social construction process (procedural rationality). This paper aims to briefly explain each interpretation, as well as to describe the theoretical implications for each one, arguing that it is a fundamental assumption which must be explained even more clearly than it has been so far.

Suggested Citation

  • Óscar Eduardo Pérez Rodríguez, 2015. "Interpretations and Theoretical Uses of the Concept of Rationality in Economics," Revista Equidad y Desarrollo, Universidad de la Salle, May.
    • Handle: RePEc:col:000452:013182
    DOI: 10.19052/ed.2773
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    References listed on IDEAS

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    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    2. Binswanger, Johannes, 2011. "Dynamic decision making with feasibility goals: A procedural-rationality approach," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 219-228, May.
    3. Herbert Simon, 2000. "Bounded rationality in social science: Today and tomorrow," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 1(1), pages 25-39, March.
    4. Aumann, Robert J., 1997. "Rationality and Bounded Rationality," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 2-14, October.
    5. Kahneman, Daniel, 2002. "Maps of Bounded Rationality," Nobel Prize in Economics documents 2002-4, Nobel Prize Committee.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Rationality; limited rationality; procedural rationality; economictheory; behavioral theory;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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