RATIONAL CHOICE THEORY AND RANDOM BEHAVIOUR

Bojan K. Milos K. Krstic, Krstic
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Bojan K. Milos K. Krstic, Krstic: University of Niš, Faculty of Economics,University of Nis, Faculty of Science and Mathematics

No 2015-01, Ekonomika, Journal for Economic Theory and Practice and Social Issues from „Ekonomika“ Society of Economists, Niš (Serbia)

Abstract: According to rational choice theory, rational consumers tend to maximize utility under a given budget constraints. This will be achieved if they choose a combination of goods that cannot satisfy their needs and provide the maximum level of utility. Gary Becker imagines irrational consumers who choose bundle on the budget line. As irrational consumers have an equal probability of choosing any bundle on the budget line, on average, we expect that they will pick the bundle lying at the midpoint of the line. The results of research in which artificial Becher’s agents choose among more than two commodities rational choice theory is small. And in more than two budget/price situations show that the percentage of agents whose behaviour violate. Adding some factors to Becker’s model of random behaviour, experimenters can minimize these minor violations and fit the actor’s choice with the theory. In addition, the results of organizations’ choices analysis show that the observed agents behave rationally, and this behaviour confirms the theory rational choice. Therefore, rational choice theory is unfalsifiable. As the theory can always fits with the facts, it would have been much more productive if we had admitted that the theory was falsifiable and then debated its explanatory value in specific circumstances.

Keywords: rational choice theory; Beker’s model of random behaviour; generalized axiom of revealed preference; falsifiability; utility maximization; rationality assumption (search for similar items in EconPapers)
JEL-codes: A1 D1 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2015-03
New Economics Papers: this item is included in nep-upt
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