The Formulation of Rational Choice

The description of a rational person in traditional economic theory, or standard game theory, is considered. As Myerson (1991) presents the prevailing view of the matter, a decision-maker is rational if he makes decisions consistently in pursuit of his own objectives. Myerson goes on to explain that...

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Bibliographic Details
Published inThe American economic review Vol. 84; no. 2; pp. 385 - 390
Main Author Sen, Amartya
Format Journal Article
LanguageEnglish
Published Menasha, Wis American Economic Association 01.05.1994
American Economic Assoc
Subjects
Behavioral sciences
Economic theory
Entscheidung
Ethical behavior
Game theory
Motivation
Motivation and Monitoring
Objective functions
Prisoners dilemma
Rational choice
Rational choice theory
Rational expectations
Rationalität
Social behavior
Social ethics
Studies
Sympathy
Theorie
Wages & salaries
Wellbeing
Work ethic
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ISSN0002-8282
1944-7981

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Summary:The description of a rational person in traditional economic theory, or standard game theory, is considered. As Myerson (1991) presents the prevailing view of the matter, a decision-maker is rational if he makes decisions consistently in pursuit of his own objectives. Myerson goes on to explain that it is assumed that each player's objective is to maximize the expected value of his own payoff, which is measured in some utility scale. The payoff function is a real-valued representation of the person's preferences over the outcomes. Rationality is seen as intelligently maximizing such a payoff function, using all the available instruments, subject to feasibility. This canonical formulation of rational choice in standard theory is critically scrutinized, identifying distinct inadequacies in different contexts. The need for context-dependent parametric variations in the characterization of rational choice is outlined.
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ISSN:0002-8282
1944-7981