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Rationality in Economics: Epistemic Assumptions and Pragmatic Justifications

Author

Listed:
  • Phoebe Koundouri
  • Nikitas Pittis

    (University of Piraeus, Greece)

  • Panagiotis Samartzis

Abstract

This paper has three main objectives. First, it aims to clarify the alternative concepts of rationality used in economics, specifically Rationality-A(coherence of subjective probabilities for every point in time), Rationality- B (perfect alignment with objective probabilities for every point in time),and Rationality-BB (asymptotic convergence to objective probabilities over time). Second, it seeks to identify distinct sets of epistemic assumptions (S1-S5) that logically entail each of these three definitions of rationality and to explain their respective roles. Third, it evaluates the pragmatic justifications for these assumptions, focusing on Dutch Book arguments for coherence and arbitrage arguments for asymptotic accuracy.

Suggested Citation

  • Phoebe Koundouri & Nikitas Pittis & Panagiotis Samartzis, 2025. "Rationality in Economics: Epistemic Assumptions and Pragmatic Justifications," DEOS Working Papers 2501, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:2501
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    File URL: http://wpa.deos.aueb.gr/docs/2025.FINAL.RATIONALITY.pdf
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    More about this item

    Keywords

    Rationality; Coherence; Accuracy; Epistemic Assumptions; Pragmatic Justifications;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • 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
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other

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