 Two interpretations of the rational choice theory and the relevance of behavioral critiqueRationality and Society, 2019, vol. 31, issue 4, 464-489 Abstract: I compare two interpretations of the rational choice theory: decision-theoretic and price-theoretic. The former takes the assumption of utility maximization as a literal description of a decision procedure. The latter considers it as a modeling device used to explain changes/variability of behavior on an aggregate level. According to the price-theoretic interpretation, these changes/variability are explained by constraints (“prices†) rather than differences in intrinsic characteristics between human populations (“tastes†). While the decision-theoretic interpretation of rationality represents a possible foundation of the price-theoretic interpretation of rationality, I argue that it is not its only possible foundation. I then show that critiques raised by behavioral economics apply to the decision-theoretic interpretation and much less so to the price-theoretic one. From the perspective of the price theory, behavioral and rational choice models are predominantly complementary. Price-theoretic interpretation helps to explain why the rational choice theory continues to play an important role in economics, even after the behavioral revolution. JEL codes: D01, D03, B41, A10 Keywords: Behavioral economics; decision theory; Marshallians; price theory; rational choice theory; reductionism; Walrasians (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:ratsoc:v:31:y:2019:i:4:p:464-489 Access Statistics for this article More articles in Rationality and Society |
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