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Rationality in Economics – The Thermodynamics Approach and Evaluation Criteria

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  • S. Prabakaran

Abstract

Rationality is one of the most over-used words in economics. Behavior can be rational, or irrational. So can decisions, preferences, beliefs, expectations, decision procedures, and knowledge. There may also be bounded rationality. And recent work in game theory has considered strategies and beliefs or expectations that are “rationalizable†. The scope of this paper is to present the rationality in economics with the thermodynamics approach and evaluation criteria. The main aspiration of this study is fivefold: 1) First we begin our description of a thermodynamics model of economics with the simplest example. 2) After that we introduced some important perception of rationality and uncertainty in economics. 3) Then we construct the mathematical model for a private ownership economy with finite sets of commodities and producers of equilibrium notions. 4) Find out the rationality and evaluation through the existence theorem for a vector of prices by using some solid evidence. 5) Finally we constructed the evaluation approach to the study of economics process by using of thermodynamics concepts, and this paper end with conclusion.

Suggested Citation

  • S. Prabakaran, 2014. "Rationality in Economics – The Thermodynamics Approach and Evaluation Criteria," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(1), pages 43-55.
    • Handle: RePEc:rss:jnljee:v3i1p5
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