Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Skip to main content
SpringerLink
Log in

Rationality, History of the Concept

  • Reference work entry
  • First Online:
The New Palgrave Dictionary of Economics

  • 93 Accesses

Abstract

This article offers a historical and methodological perspective on the concept of rationality. It gives an overview of the various interpretations of the notion, from self-interest to rational choice and expected utility to strategic rationality and rational expectations. It pays special attention to the ethical dimensions of the concept. The article further places rationality within a long-ranging discussion concerning the status of assumptions within economics. It explicitly considers efforts to test rationality directly. The article concludes with an evaluation of recent efforts to replace rationality with the notion of bounded rationality.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 6,499.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 8,499.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

Bibliography

  • Alchian, A.A. 1950. Uncertainty, evolution and economic theory. Journal of Political Economy 58: 211–222.

    Article  Google Scholar 

  • Arrow, K.J. 1987. Economic theory and the hypothesis of rationality. In The New Palgrave: A dictionary of economics, vol. 1, ed. J. Eatwell, M. Milgate, and P. Newman. New York: W.W. Norton.

    Google Scholar 

  • Aumann, R.J. 1997. Rationality and bounded rationality. Games and Economic Behavior 21: 2–14.

    Article  Google Scholar 

  • Aumann, R.J., and S. Sorin. 1989. Cooperation and bounded recall. Games and Economic Behavior 1: 5–39.

    Article  Google Scholar 

  • Becker, G.S. 1962. Irrational behavior and economic theory. Journal of Political Economy 70: 1–13.

    Article  Google Scholar 

  • Blaug, M. 1992. The methodology of economics: Or, how economists explain. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Bowles, S. 1991. What markets can – And cannot – Do. Challenge 34(4): 11–16.

    Article  Google Scholar 

  • Bray, M., and D. Kreps. 1987. Rational learning and rational expectations. In Arrow and the ascent of modern economic theory, ed. G. Feiwel. New York: New York University Press.

    Google Scholar 

  • Brunswik, E. 1955. In defense of probabilistic functionalism: A reply. Psychological Review 62: 236–242.

    Article  Google Scholar 

  • Caldwell, B.J. 1994. Beyond positivism: Economic methodology in the twentieth century. London: Routledge.

    Book  Google Scholar 

  • Daston, L. 1983. Rational individuals versus laws of society. In Probability since 1800, ed. M. Heidelberger, L. Krüger, and R. Rheinwald. Bielefeld: Universität Bielefeld.

    Google Scholar 

  • Elster, J. 1989. Social norms and economic theory. Journal of Economic Perspectives 3(4): 99–117.

    Article  Google Scholar 

  • Friedman, M. 1953. The methodology of positive economics. Reprinted in Hausman (1984).

    Google Scholar 

  • Gauthier, D. 1991. Morals by agreement. New York: Cambridge University Press.

    Google Scholar 

  • Gigerenzer, G., and P.M. Todd. 1999. Fast and frugal heuristics: The adaptive toolbox. In Simple heuristics That make us smart, ed. G. Gigerenzer, P.M. Todd, and A.R. Group. New York: Oxford University Press.

    Google Scholar 

  • Hausman, D. (ed.). 1984. The philosophy of economics. Cambridge: Cambridge University Press.

    Google Scholar 

  • Hausman, D., and M. McPherson. 1984. Economics, rationality, and ethics. In Hausman (1984).

    Google Scholar 

  • Hutchison, T.W. 1956. On verification in economics. Reprinted in Hausman (1984).

    Google Scholar 

  • Kahneman, D., and A. Tversky. 1974. Judgment under uncertainty: Heuristics and biases. Science 185: 1124–1131.

    Article  Google Scholar 

  • Kirzner, I.M. 1962. Rational action and economic theory. Journal of Political Economy 70: 380–385.

    Article  Google Scholar 

  • Knight, F.H. 1925. Fact and metaphysics in economic psychology. American Economic Review 15: 247–266.

    Google Scholar 

  • Machlup, F. 1956. On indirect verification. Reprinted in Hausman (1984).

    Google Scholar 

  • Mill, J.S. 1836. On the definition and method of political economy. Reprinted in Hausman (1984).

    Google Scholar 

  • Muth, J.F. 1961. Rational expectations and the theory of price movements. Econometrica 29: 315–355.

    Article  Google Scholar 

  • Neumann, J. von., and O. Morgenstern. 1944/1955. Theory of games and economic behavior. Princeton: Princeton University Press.

    Google Scholar 

  • Peterson, C.R., and L.R. Beach. 1967. Man as an intuitive statistician. Psychological Bulletin 68: 29–46.

    Article  Google Scholar 

  • Robbins, L. 1935. The nature and significance of economic science. Reprinted in Hausman (1984).

    Google Scholar 

  • Rubinstein, A. 1998. Modeling bounded rationality. Cambridge, MA: MIT Press.

    Google Scholar 

  • Samuelson, P.A. 1947. Foundations of economic analysis. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Sargent, T.J. 1981. Interpreting economic time series. Journal of Political Economy 89: 213–248.

    Article  Google Scholar 

  • Sargent, T.J. 1984. Autoregressions, expectations, and advice (with discussion). American Economic Review 74: 408–421.

    Google Scholar 

  • Sargent, T.J. 1993. Bounded rationality in macroeconomics. Oxford: Oxford University Press.

    Google Scholar 

  • Savage, L.J. 1954. The foundations of statistics. New York: John Wiley & Sons.

    Google Scholar 

  • Sen, A. 1977. Rational fools: A critique of the behavioral foundations of economic theory. Philosophy and Public Affairs 6: 317–344.

    Google Scholar 

  • Sen, A. 1987. Rational behavior. In The New Palgrave: A dictionary of economics, vol. 4, ed. J. Eatwell, M. Milgate, and P. Newman. New York: W.W. Norton.

    Google Scholar 

  • Sent, E.M. 1997. The evolving rationality of rational expectations: An assessment of Thomas Sargent’s achievements. Cambridge: Cambridge University Press.

    Google Scholar 

  • Sent, E.M. 2004a. The legacy of Herbert Simon in game theory. Journal of Economic Behavior and Organization 53: 303–317.

    Article  Google Scholar 

  • Sent, E.M. 2004b. Behavioral economics: How psychology made its (limited) way back into economics. History of Political Economy 36: 735–760.

    Article  Google Scholar 

  • Simon, H.A. 1955. A behavioral model of rational choice. Quarterly Journal of Economics 69: 99–118.

    Article  Google Scholar 

  • Simon, H.A. 1976. From substantive to procedural rationality. In Method and appraisal in economics, ed. S. Latsis. Cambridge: Cambridge University Press.

    Google Scholar 

  • Simon, H.A. 1963. Testability and approximation. Reprinted in Hausman (1984).

    Google Scholar 

  • Smith, V. 1991. Rational choice. Journal of Political Economy 99: 877–897.

    Article  Google Scholar 

  • Smith, V. 1992. Game theory and experimental economics. In Toward a history of game theory, ed. E.R. Weintraub. Durham: Duke University Press.

    Google Scholar 

  • Sugden, R. 1991. Rational choice: A survey. Economic Journal 101: 751–783.

    Article  Google Scholar 

  • Suppes, P. 1961. The philosophical relevance of decision theory. Journal of Philosophy 58: 605–614.

    Article  Google Scholar 

  • Tisdell, C. 1975. Concepts of rationality in economics. Philosophy of Social Science 5: 259–272.

    Google Scholar 

  • Tversky, A., and D. Kahneman. 1971. Belief in the law of small numbers. Psychological Bulletin 76: 105–110.

    Article  Google Scholar 

  • Varian, H.R. 1987. Differences of opinion in financial markets. In Financial risk: Theory, evidence, and implications, Proceedings of the 11th annual economic policy conference of the Federal Reserve Bank of St. Louis.

    Google Scholar 

  • Weber, M. 1904/1999. The area of economics, economic theory, and the ideal type. In Essays in economic sociology, ed. M. Weber. Princeton: Princeton University Press, 1999.

    Google Scholar 

  • Winter, S.G. 1964. Economic ‘natural selection’ and the theory of the firm. Yale Economic Essays 4: 225–272.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Esther-Mirjam Sent

Authors
  1. Esther-Mirjam Sent
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Copyright information

© 2018 Macmillan Publishers Ltd.

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Sent, EM. (2018). Rationality, History of the Concept. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2834

Download citation

Publish with us

Policies and ethics

Search

Navigation