rational behaviour
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by
Steven
N.
Durlauf
and
Lawrence
E.
Blume
Alternate versions available:
1987 Edition
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Abstract
A clear distinction must be drawn between (a) the type of behaviour that might be described as rational, and (b) rational behaviour models that might be useful in making predictions about actual behaviour. Neither of the two standard views of rational behaviour – as ‘consistent choice’ or as ‘self-interest maximization’ – has emerged as an adequate representation of rationality or of actuality. The difficulties that these views encounter carry over to rational behaviour models accommodating uncertainty.
Keywords
adaptive expectations; binariness; bounded rationality; cardinal utility; choice; completeness; enforced maximization; Exchange; expectation formation; expected utility; externalities; instrumental rationality; natural selection; Pareto efficiency; preferences; Prisoner's Dilemma; probability; rational behaviour; rational expectations; revealed preference theory; risk; satisficing; self-interest; Sen, A. K.; social norms; strong independence; substantive rationality; sure thing principle; transitivity; uncertainty; utilitarianism
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How to cite this article
Sen, Amartya. "rational behaviour." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 24 May 2013 <http://www.dictionaryofeconomics.com/article?id=pde2008_R000022> doi:10.1057/9780230226203.1385

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