Constant or Variable Rationality As an Assumption of Economic Theory

Vladimir Avtonomov

Journal of the New Economic Association, 2017, vol. 33, issue 1, 142-146

Abstract: The article deals with evolution of rationality assumption as component of the model of man in economic science. In classical political economy this assumption didn't play the key role separating the scope of economic science - this role was performed by the assumption of self-interest. The rationality assumption became important as a result of the Marginal revolution and began to be an object of special research only in the context of expected utility maximization hypothesis of von Neuman and Morgenstern. These developments made it remote from everyday human behavior. In order to make economics a bit more realistic various strategies are used which are briefly surveyed. Within the constant rationality approach we could choose a model of a representative agent characterized by full or bounded rationality. Within the variable rationality approach an additional economic agent may be introduced who will be responsible for observed deviations from rational behaviour, while all the other agents could be described by the familiar rational model. The second variant consists in splitting the economic agent into different subpersonalities, having different, and moreover, conflicting goals. Still another option is to make rationality not only variable but also continuous. In this case it is possible to reach the optimal rationality which differs from the maximum one.

Keywords: rationality; model of man; classical political economy; marginal revolution; behavioral economics (search for similar items in EconPapers)
JEL-codes: B1 B2 B3 B4 B5 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.econorus.org/repec/journl/2017-33-142-146.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2017:i:33:p:142-146

Access Statistics for this article

Journal of the New Economic Association is currently edited by Victor Polterovich and Aleksandr Rubinshtein

More articles in Journal of the New Economic Association from New Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Alexey Tcharykov ().