Showing papers on "Great Rationality Debate published in 2014"

Psychological versus economic models of bounded rationality

Abstract: That the rationality of individual people is ‘bounded’ – that is, finite in scope and representational reach, and constrained by the opportunity cost of time – cannot reasonably be controversial as an empirical matter. In this context, the paper addresses the question as to why, if economics is an empirical science, economists introduce bounds on the rationality of agents in their models only grudgingly and partially. The answer defended in the paper is that most economists are interested primarily in markets and only secondarily in the dynamics of individual decisions – specifically, they are interested in these dynamics mainly insofar as they might systematically influence the most useful approaches to modeling interesting markets. In market contexts, bounds on rationality are typically generated by institutional and informational properties specific to the market in question, which arise and are sustained by structural dynamics that do not originate in or reduce to individuals' decisions or psychologic...

A probabilistic ghost in the experimental machine

Abstract: This paper focuses on the opposition between two contemporary research programs in economics: behavioral economics (BE) and experimental market economics (EME). Our claim is that the arguments of this opposition can be clarified through the lens of another opposition in the philosophy of probability and in probability theory, between Bayesianism and frequentism. We show how this probabilistic opposition has indirectly shaped a controversy in psychology that opposes two research programs - Heuristics and Biases and Ecological Rationality - which play respective roles in the foundations of individual rationality in BE and EME. To understand these theoretical interrelationships, we investigate the 1996 controversy between Kahneman, Tversky, and Gigerenzer. Those psychologists held different views on how probabilistic representations influence the context-dependency of rationality. This provides a rationale to suggest that a probabilistic ghost may be haunting the experimental machine in economics, and explains how and why the oppositions between BE and EME are structured around the interplay between the norms of rationality and the context in which rationality is exercised.

Normative ecological rationality: normative rationality in the fast-and-frugal-heuristics research program

Abstract: The purpose of this paper is to examine the normative interpretation of the fast-and-frugal research program and in particular to contrast it with the normative reading of rational choice theory and behavioral economics. The ecological rationality of fast-and-frugal heuristics is admittedly a form of normative naturalism (Gigerenzer and Sturm 2012) – it derives what agents “ought” to do from that which “is” ecologically rational – and the paper will examine how this differs from the normative rationality associated with rational choice theory. I will also attempt to assess the relative adequacy of normative ecological rationality.

Rationality and Explanation in Economics

Abstract: Introduction Part I Rationality in the history of economic thought 1. Rationality in economics before World War II 2. The hardly consistent story of rationality-consistency Part II Objections to the notion of minimal rationality 3. Can methodological individualism survive? 4. Is still some room left for irrationality? 5. Minimal and Maximal Rationality: loosely defined concepts? Part III But is rationality really necessary in economics? 6. Why unrealism of assumptions remains a predicament 7. Explaining in the absence of rationality Part IV Regarding economic explanations 8. Rationality and Natural Selection in Economics 9. Theories of explanation applied to economics. Epilogue

In search for a standard of rationality.

Abstract: The debate on human rationality goes to the heart of fundamental questions about human existence When can we say that a decision is correct? What is the basis for the achievements of the human intellect? What is the most important cognitive distinction between humans and non-human organisms? Proposals of rationality have an interesting status as psychological theories They are not quite theories of decision making in practice—such theories are referred to as descriptive theories, to imply that they describe what goes on Rather, proposals of rationality are normative theories, to imply theories of how people ought to reason, if they seek decision outcomes, which are deemed to be correct, on the basis of some absolute standard (here, we are simplifying a complex debate; arguments have been expressed against a distinction between normative and descriptive rationality as we make above, eg, Elqayam and Evans, 2011, 2013) Of course, a normative theory must be partly a descriptive theory as well, since it is assumed that humans can, in principle, sometimes, reason on the basis of the normative prescription (they may just not do so, in typical situations, perhaps due to process demands or time or other constraints)

The Varieties of Economic Rationality: From Adam Smith to Contemporary Behavioural and Evolutionary Economics

Abstract: @text Chapter 1: Adam Smith and the idea of morally constrained rationality Chapter 2: John Stuart Mill and the concept of socially embedded rationality Chapter 3: William Stanley Jevons and the concept of rationality as maximization Chapter 4: Vilfredo Pareto and the concept of instrumental rationality Chapter 5: Lionel Robbins and consistency of choices under scarcity Chapter 6: Neoclassical rationality under fire: theoretical, methodological and empirical critique in the late '30's Chapter 7: Three conventionalist responses. Machlup, Samuelson and Friedman Chapter 8: Popper's retreat and the 'principle of rationality' Chapter 9: Probabilistic choice and strategic rationality Chapter 10: Herbert Simon and the concept of bounded rationality Chapter 11: Rationality in behavioral economics Chapter 12: The rationality of embedded individuals Conclusion: What is rational after all?

Emotion, utility maximization, and ecological rationality

Abstract: This paper examines the adequacy of an evolutionary-oriented notion of rationality—ecological rationality—that has recently been proposed in economics. Ecological rationality is concerned with what it is rational to do, and in this sense is a version of what philosophers call ‘practical rationality’. Indeed, the question of the adequacy of ecological rationality as it is understood in the paper, is the question of whether ecological rationality is a genuine notion of practical rationality. The paper first explicates and motivates the notion of ecological rationality by (a) explicating the notion of practical rationality, (b) grounding ecological rationality in an evolutionary approach to the emotions which is mainly illustrated by the example of fear, and (c) outlining the reasons adduced in economics for generalizing ecological rationality beyond the emotions. The paper then argues that (d) the raison d’etre of practical rationality is first and foremost a specific role it plays in the explanation of behavior, or in telling why it has occurred. Finally, based on (a)–(d), the paper argues that (e) ecological rationality lacks a constitutive feature of practical rationality—namely, normativity—which is related to the latter’s basic explanatory role, and thus cannot be considered a genuine notion of practical rationality. While the paper focuses on the economic version of ecological rationality, its conclusions apply just as well to other, related, versions of the ecological notion that have been proposed in biology and evolutionary psychology.

The Locality and Globality of Instrumental Rationality: The normative significance of preference reversals

Abstract: When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all of one’s beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible.

The Normative Requirement of Means-End Rationality and Modest Bootstrapping

Abstract: “Myth theorists” have recently called the normative requirement of means-end rationality into question. I show that we can accept certain lessons from the Myth Theorists and also salvage our intuition that there is a normative requirement of means-end rationality. I argue that any appeal to a requirement to make our attitudes coherent as such is superfluous and unnecessary in order to vindicate the requirement of means-end rationality and also avoid the problematic conclusion that persons ought to take the means to whatever ends they happen to intend.

Is there still a role for rationality in human affairs

Abstract: In social science, the wider epistemological debates regarding polarizing perspectives of rationality (explanation through deterministic approach) and interpretive understanding (understanding through non-physical human mind) in explaining or making sense of lifeworld or social system have been critically examined in this paper. In doing so, this article explores Habermas’s Theory of Communicative Action (rationality in socially depended situation) and psychological (strategic action) Game Theory (a deterministic model for rational choice) and, hence, identifies an intriguing link between instrumental/mechanistic and non-instrumental issues regarding rationality concept

Rationality in Economics - The Thermodynamics Approach and Evaluation Criteria

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.

Rationality — The Notion, Its Genesis and Its Effects

Abstract: Rationality is a term that is used for different matters in different disciplines. This makes its use difficult because such differing terminological applications are apt to result in confusion and misunderstandings. However, precisely this is a typical feature of the interplay between different system worlds and their own “codes”, that is, their own specialised languages with their respective terms and connotations.