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Economic Rationality and Rational Credence

Edgar Sánchez Carrera and Jose Ma Gonzalez Lara
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Jose Ma Gonzalez Lara: Full Professor of Political Economy at the Faculty of Economics, Autonomous University of Coahuila, UAdeC, Saltillo, México

International Journal of Applied Behavioral Economics (IJABE), 2019, vol. 8, issue 1, 49-61

Abstract: The aim of this article is to show that rational maximizer agents, i.e. economic rationality, do not parsimoniously with rational credence, i.e. agents preferences driven by beliefs, traditions, idiosyncrasy, culture and/or customs depending on the social state representing a possible credence. The authors formulate a model on rational behavior, where either an economic and/or credence rationality results in the expected referential payoff of a rational preference driven by beliefs is not necessarily the optimal one in terms of having the largest payoff. Hence, the authors show the relationship between the expected payoff and instrumental or credence payoffs of choices, and what justifies choosing the latter when, ultimately, it is the former that maximizes your payoff. Finally, the authors conclude that agents' ordinary decisions may consider together both to the economic rationality and credence rationality, given their certain constraints on information, beliefs, and resources.

Date: 2019
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Handle: RePEc:igg:jabe00:v:8:y:2019:i:1:p:49-61