Rationality in Economics: Epistemic Assumptions and Pragmatic Justifications

Phoebe Koundouri (), Nikitas Pittis () and Panagiotis Samartzis
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Nikitas Pittis: University of Piraeus, Greece

No 2501, DEOS Working Papers from Athens University of Economics and Business

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.

Keywords: Rationality; Coherence; Accuracy; Epistemic Assumptions; Pragmatic Justifications (search for similar items in EconPapers)
JEL-codes: C44 D81 D83 D89 (search for similar items in EconPapers)
Date: 2025-01-05
New Economics Papers: this item is included in nep-hpe and nep-upt
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