This is a paperback edition of a major contribution to the field, first published in hard covers in 1977. The book outlines a general theory of rational behaviour consisting of individual decision theory, ethics, and game theory as its main branches. Decision theory deals with a rational pursuit of individual utility; ethics with a rational pursuit of the common interests of society; and game theory with an interaction of two or more rational individuals, each pursuing his (...) own interests in a rational manner. (shrink)

What behavior is rational? It’s rational to act ethically, some think. Others endorse instrumentalism — it is rational to pursue one’s goals. Still others say that acting rationally always involves promoting one’s self-interest. Many philosophers have given each of these answers. But these answers don’t really conflict; they aren’t vying to describe some shared concept or to solve some mutually acknowledged problem. In so far as this is debated, it is a pseudo-debate. The different uses of (...) ‘rational action’ differ merely in meaning. I shall defend the following claims: ‘rational behavior’ is used in ethical, prudential, and instrumental ways (section 1); these uses of ‘rational behavior’ are distinct (section 2); they do not represent competing theories of rational behavior (section 3); we should stop using ‘rational behavior’ ethically and prudentially, but we may continue its instrumental use (section 4). (shrink)

The paper first summarizes the author's decision-theoretical model of moral behavior, in order to compare the moral implications of the act-utilitarian and of the rule-utilitarian versions of utilitarian theory. This model is then applied to three voting examples. It is argued that the moral behavior of act-utilitarian individuals will have the nature of a noncooperative game, played in the extensive mode, and involving action-by-action maximization of social utility by each player. In contrast, the moral behavior of rule-utilitarian (...) individuals will have the nature of a cooperative game, played in the normal mode, and involving a firm commitment by each player to a specific moral strategy (viz. to the strategy selected by the rule-utilitarian choice criterion) — even if some individual actions prescribed by this strategy, when considered in isolation, should fail to maximize social utility. The most important advantage that rule utilitarianism as an ethical theory has over act utilitarianism lies in its ability to give full recognition to the moral and social importance of individual rights and personal obligations. It is easy to verify that action-by-action maximization of social utility, as required by act utilitarianism, would destroy these rights and obligations. In contrast, rule utilitarianism can fully recognize the moral validity of these rights and obligations precisely because of its commitment to an overall moral strategy, independent of action-by-action social-utility maximization. The paper ends with a discussion of the voter's paradox problem. The conventional theory of rational behavior cannot avoid the paradoxical conclusion that, in any large electorate, voting is always an irrational activity because one's own individual vote is extremely unlikely to make any difference to the outcome of any election. But it can be shown that, by using the principles of rule-utilitarian theory, this paradox can easily be resolved and that, in actual fact, voting, even in large electorates, may be perfectly rational action. More generally, the example of rule utilitarianism shows what an important role the concept of a rational commitment can play in the analysis of rational behavior. (shrink)

Stanovich & West's target article undervalues the power of implicit learning (particularly reinforcement learning). Implicit learning may allow the learning of more rational responses–and sometimes even generalisation of knowledge–in contexts where explicit, abstract knowledge proves only of limited value, such as for economic decision-making. Four other comments are made.

While Rational Choice Theory (RC) may be understood as a theory of choice, which does not necessarily reflect actual deliberative processes, rule-following behavior is definitely based on a certain form of delibera- tion. This article aims at clarifying the relationship between the two. Being guided by instrumental rules, i.e., rules reducible to the maximiza- tion principle, is perfectly consistent with the fundamental behavioral assumptions of RC. But human individuals use other forms of rules in decision making, especially tie-breaking (...) rules and coordination rules. It is argued that within RC no satisfying account of such rule-following behav- ior can be given. In particular it is impossible to determine suitable pref- erence orderings such that coordinating may be understood as maximizing relative to these orderings. Still, once there is coordination, following a coordination rule may be perfectly consistent with the basic assumptions of RC. So there might be a more complex theory of action that incorpo- rates RC as well as a satisfying theory of rule-guided behavior. (shrink)

We propose a framework for including information‐processing bounds in rational analyses. It is an application of bounded optimality (Russell & Subramanian, 1995) to the challenges of developing theories of mechanism and behavior. The framework is based on the idea that behaviors are generated by cognitive mechanisms that are adapted to the structure of not only the environment but also the mind and brain itself. We call the framework computational rationality to emphasize the incorporation of computational mechanism into the (...) definition of rational action. Theories are specified as optimal program problems, defined by an adaptation environment, a bounded machine, and a utility function. Such theories yield different classes of explanation, depending on the extent to which they emphasize adaptation to bounds, and adaptation to some ecology that differs from the immediate local environment. We illustrate this variation with examples from three domains: visual attention in a linguistic task, manual response ordering, and reasoning. We explore the relation of this framework to existing “levels” approaches to explanation, and to other optimality‐based modeling approaches. (shrink)

This paper argues that economic rationality and ethical behavior cannot be reduced one to the other, thus casting doubt on the validity of assertions such as ‘profit is ethical’ or ‘ethics pays’. In order to express ethical dilemmas in a way which opposes economic interest with ethical concerns, we propose a model of rational behavior that combines these two irreducible dimensions in an open but not arbitrary manner. Behaviors that are neither ethical nor profitable are considered irrational (...) . However, behaviors that are profitable but unethical, and behaviors that are ethical but not profitable, are all treated as rational . Combining ethical concerns with economic interest, ethical business is in turn seen as an optimal form of rationality between venality and sacrifice. Because everyone prefers to communicate that they act ethically, ethical business remains ambiguous until some economic interest is actually sacrificed. We argue, however, that ethical business has an interest in demonstrating its consistency between communication and behavior by a transparent attitude. On the other hand, venal behaviors must remain confidential to hide the corresponding lack of consistency. This discursive approach based on transparency and confidentiality helps to further distinguish between ethical and unethical business behaviors. (shrink)

This paper argues that economic rationality and ethical behavior cannot be reduced one to the other, thus casting doubt on the validity of assertions such as ‘profit is ethical’ or ‘ethics pays’. In order to express ethical dilemmas in a way which opposes economic interest with ethical concerns, we propose a model of rational behavior that combines these two irreducible dimensions in an open but not arbitrary manner. Behaviors that are neither ethical nor profitable are considered irrational (...) (non‐arbitrariness). However, behaviors that are profitable but unethical, and behaviors that are ethical but not profitable, are all treated as rational (openness). Combining ethical concerns with economic interest, ethical business is in turn seen as an optimal form of rationality between venality and sacrifice. Because everyone prefers to communicate that they act ethically, ethical business remains ambiguous until some economic interest is actually sacrificed. We argue, however, that ethical business has an interest in demonstrating its consistency between communication and behavior by a transparent attitude. On the other hand, venal behaviors must remain confidential to hide the corresponding lack of consistency. This discursive approach based on transparency and confidentiality helps to further distinguish between ethical and unethical business behaviors. (shrink)

Rational analysis (Anderson 1990, 1991a) is an empiricalprogram of attempting to explain why the cognitive system isadaptive, with respect to its goals and the structure of itsenvironment. We argue that rational analysis has two importantimplications for philosophical debate concerning rationality. First,rational analysis provides a model for the relationship betweenformal principles of rationality (such as probability or decisiontheory) and everyday rationality, in the sense of successfulthought and action in daily life. Second, applying the program ofrational analysis to research (...) on human reasoning leads to a radicalreinterpretation of empirical results which are typically viewed asdemonstrating human irrationality. (shrink)

What is the nature of moral behavior? According to the study of bounded rationality, it results not from character traits or rational deliberation alone, but from the interplay between mind and environment. In this view, moral behavior is based on pragmatic social heuristics rather than moral rules or maximization principles. These social heuristics are not good or bad per se, but solely in relation to the environments in which they are used. This has methodological implications for the (...) study of morality: Behavior needs to be studied in social groups as well as in isolation, in natural environments as well as in labs. It also has implications for moral policy: Only by accepting the fact that behavior is a function of both mind and environmental structures can realistic prescriptive means of achieving moral goals be developed. (shrink)

This first quotation already calls into question many of the most often repeated and best known theses about Dilthey's position on the social and historiographical sciences. For example, what I quoted is not compatible with the widespread opinion that Dilthey made subjective empathy the foundation of interpretation, that he was psychologizing the "operation called Verstehen," or that he thought all historiography and social science must be based on psychology and must, in the last resort, rely on introspection or the so (...) called "subjective experience". This mistaken opinion has influenced Max Weber and has dominated one side of the whole dispute about the methodological character of historiography, psychology, and the social sciences even up to the present writings of men like T. Abel and P. Winch. A quite different picture of Dilthey's position will have emerged at the end of this paper. (shrink)

Ideally, pro-environmental consumer behavior leads to a lower impact on the environment. However, due to negative behavioral spillovers environmentally friendly behavior could lead to an overall higher environmental impact if subsequent environmentally unfriendly behavior occurs. In this exploratory interview study we focused on two pathways leading to negative spillover: a psychological path and an economic path. We wanted to gain insight into people’s motivations to behave environmentally unfriendly and to explore people’s level of awareness of both pathways. (...) Our results indicate that pro-environmental behaviors that are associated with higher effort are performed less frequently, and that when people do not perform these behaviors they associate them with higher effort levels. When people perceive behaviors as more effortful they increasingly seem to use arguments to motivate and rationalize why performing the behavior is difficult or impossible. Moreover, we found that although some people can imagine that moral licensing and rebound effects could occur and can provide examples from their own lives, most people assess these concepts as not rational. People seem unaware of the relation between a first pro-environmental behavior and a subsequent behavior, and therefore inconsistencies in behavior go unnoticed. As people are good at rationalizing why they do not perform specific PEBs, they in general feel satisfied with their own pro-environmental actions. In order to discourage negative spillovers, we describe a number of approaches and research ideas aimed at taking away the grounds for rationalization. (shrink)

For Herbert Gintis, the “rational actor,” or “beliefs, preferences, and constraints (BPC),” model is central to his unifying framework for the behavioral sciences. It is not argued here that this model is refuted by evidence. Instead, this model relies ubiquitously on auxiliary assumptions, and is evacuated of much meaning when applied to both human and nonhuman organisms. An alternative perspective of “program-based behavior” is more consistent with evolutionary principles. (Published Online April 27 2007).

The connection between economics and ethics is as old as economics itself, and central to both disciplines. It is an issue that has recently attracted much interest from economists and philosophers. The connection is, in part, a result of the desire of economists to make policy prescriptions, which clearly require some normative criteria. More deeply, much economic theory is founded on the assumption of utility maximization, thereby creating an immediate connection between the foundations of economics and the philosophical literature on (...) utilitarianism and reasons for action. In fact, some influential contemporary approaches to ethics advocate decision-theoretic or game-theoretic foundations of some sort for moral principles, while several economic theorists are now prepared to take into account the ethical dimensions of rational decisions. As a result, it appears that economics and ethics are somehow inextricably linked through theories of rational decision-making. Most of us would probably find it disturbing to concede that there are contradictions between the prescriptions of rationality and the requirements of moral `rightness'. The essays included in the present volume provide a detailed analysis of the connections between ethics and economics as viewed from several different - sometimes conflicting - perspectives. This book, the outcome of a joint meeting of philosophers and economists, has three main themes: the validity of utilitarianism much used by economists, the notion of fairness and equity, and the coherence of the rationality postulate of economics. The book does not reach any final conclusions, but it greatly illuminates the exact areas of possible disagreement and indeed the open-ended nature of ethical reasoning. There is much that economists, and especially welfare economists, can learn from these papers - not least circumspection. (shrink)

Attempts to explain human behavior that appeal to economic rationality share many of the same ontological as- sumptions and methodological practices that the so-called ‘adaptationist program’ in biology was criticized for. This program in biology was largely abandoned by biologists as poorly motivated, and replaced with the active testing of both adaptive and non-adaptive hypotheses regarding the spread and maintenance of traits in populations. This development was largely welcome by the biological community, despite having required the development of new (...) tools, both conceptual and method- ological. Many analysts of contemporary microeconomic practice criticize the assumptions and practices employed therein as similarly poorly motivated. Close attention to these criticisms reveal them to have more than superficial similarities to the critiques of adaptationism in biology. These similarities extend to some macroeconomics researchers recent suggestions of ways that hypotheses regarding the causes of people’s actions might be tested; as yet, however, these suggestions have not been embraced by the field as a whole. By attending to the ways in which biological practice has moved beyond the adaptationist program, similar changes in economic practice may be motivated. (shrink)

Mark Blaug played a central role in the development of the field of the methodology of economics, alongside his theoretical work and contributions to the history of economic thought. The purpose, in this article, is to focus on his contributions to the topic of 'formalism in economics', in relation to his methodological commentaries on the Popperian and Lakatosian approaches to the philosophy of science. In Blaugian spirit, the discussion is related to economic theory and draws on the history of economic (...) thought. The argument focuses on the troublesome interface between theoretical and applied economics in mainstream economics. The article includes, as a case study, an assessment of new behavioural economics in Popperian and Lakatosian terms. The conclusion is that such an appraisal exercise—i.e., whether the research programme is progressive or degenerative—is clouded by the interface between the form of empiricism promoted by Popper and Lakatos and the methodological framework of mainstream economics. No conclusion is feasible independent of methodological approach. (shrink)

In strategic situations, agents base actions on knowledge and beliefs. This includes knowledge about others’ strategies and preferences over strategy profiles, but also about other external factors. Bernheim and Pearce in 1984 independently defined the game theoretic solution concept of rationalizability, which is built on the premise that rational agents will only take actions that are the best response to some situation that they consider possible. This accounts for other agents’ rationality as well, limiting the strategies to which a (...) particular agent must respond, enabling further elimination until the strategies stabilize. We seek to generalize rationalizability to account not only for actions, but knowledge of the world as well. This will enable us to examine the interplay between action based and knowledge based rationality. We give an account of what it means for an action to be rational relative to a particular state of affairs, and in turn relative to a state of knowledge. We present a class of games, Epistemic Messaging Games, with a communication stage that clarifies the epistemic state among the players prior to the players’ actions. We use a history based model, which frames individual knowledge in terms of local projections of a global history. With this framework, we give an account of rationalizability for subclasses of EMG. (shrink)

Pt. I. Philosophy and cognitive-behavioral therapy (CBT) -- Ch. 1. The "philosophical origins" of CBT -- Ch. 2. The beginning of modern cognitive therapy -- Ch. 3. A brief history of philosophical therapy -- Ch. 4. Stoic philosophy and psychology -- Ch. 5. Rational emotion in stoicism and CBT -- Ch. 6 Stoicism and Ellis's rational therapy (REBT) -- Pt. II. The stoic armamentarium -- Ch. 7. Contemplation of the ideal stage -- Ch. 8. Stoic mindfulness of the (...) "here and now" -- Ch. 9. Self-analysis and disputation -- Ch. 10. Autosuggestion, premeditation, and retrospection -- Ch. 11. Preditatio malorum and mental rehearsal -- Ch. 12. Stoic fatalism, determination, and acceptance -- Ch. 13. The view from above and stoic metaphysics. (shrink)

This article traces a normative turn between the middle of the 1940s and the early 1950s reflected in the reformulation, interpretation, and use of rational choice theories at the Cowles Commission for Research in Economics. This turn is paralleled by a transition from Jacob Marschak’s to Tjalling Koopmans’s research program. While rational choice theories initially raised high hopes that they would serve as empirical accounts to inform testable hypotheses about economic regularities, they became increasingly modified and interpreted as (...) normative approaches offering behavioral recommendations for individual agents, organizations, government, and teams. The predefined elements constitutive of these accounts, inspired by simple rules of logic, were now meant to represent the basic demands of rationality and theories of rational decision making specified rules of conduct that were meant to shape rather than explain behavior. (shrink)

Counterfactual thinking may be described as disciplined, realistic, and rational, but we move a step further to describe a theoretical perspective centering on behavior regulation. According to this perspective, counterfactual thinking primarily centers on coordination of ongoing behavior. In short, most “if only” thoughts in daily life center on the acquisition of goals; hence, counterfactual thinking may be illuminated by considering the large literature on goal cognition.

Decision-makers frequently struggle to base their choices on an exhaustive evaluation of all options at stake. This is particularly so when the choice problem at hand is complex, because the available alternatives are hard to compare. Rather than striving to choose the most valuable alternative, in such situations decision-makers often settle for the choice of an alternative which is not inferior to any other available alternative instead. In this paper, we extend two established models of boundedly rational choice, the (...) categorize then choose heuristic and the rational shortlist method, to incorporate this kind of “indecisive” choice behavior. We study some properties of these extensions and provide full behavioral characterizations. (shrink)

This article addresses major arguments in the controversy about the “rationality” of moral behavior: can moral behavior be explained by rational choice theory (RCT)? The two positions discussed are the incentives thesis (norms are incentives as any other costs and benefits) and the autonomy thesis claiming that moral behavior has nothing to do with utility. The article analyses arguments for the autonomy thesis by J. Elster, A. Etzioni, and J. G. March and J. P. Olsen. Finally, (...) the general claim is discussed whether norm following and norm emergence are utility maximizing. The conclusion is that the autonomy thesis is not tenable if one applies a wide subjectivist, social psychological version of RCT that includes the assumption of “bounded rationality.” The autonomy thesis is only compatible with a narrow version of RCT that excludes internal outcomes and that refers to norms that do not have external outcomes. It is argued that such a narrow version is not capable of explaining many forms of behavior social scientists are interested in. (shrink)

Whereas Brian Skyrms in his chapter views rationality and evolution as alternative ways to derive decision behaviour, indirect evolution allows us to combine the two approaches. By focussing on Skyrms’ examples it will be illustrated how optimal decisions for given rules of interaction can influence the future rules of interaction. Here evolution does not determine behaviour directly, but only indirectly via the rules. We, furthermore, report on an experiment, related to Skyrms’ examples, revealing effects of deliberation in the sense of (...) forward-looking considerations and of path dependence in the sense of adapting to past success. (shrink)

Much research on judgment and decision making has focussed on the adequacy of classical rationality as a description of human reasoning. But more recently it has been argued that classical rationality should also be rejected even as normative standards for human reasoning. For example, Gigerenzer and Goldstein and Gigerenzer and Todd argue that reasoning involves “fast and frugal” algorithms which are not justified by rational norms, but which succeed in the environment. They provide three lines of argument for this (...) view, based on: the importance of the environment; the existence of cognitive limitations; and the fact that an algorithm with no apparent rational basis, Take-the-Best, succeeds in an judgment task. We reconsider –, arguing that standard patterns of explanation in psychology and the social and biological sciences, use rational norms to explain why simple cognitive algorithms can succeed. We also present new computer simulations that compare Take-the-Best with other cognitive models. Although Take-the-Best still performs well, it does not perform noticeably better than the other models. We conclude that these results provide no strong reason to prefer Take-the-Best over alternative cognitive models. (shrink)

This volume explores from multiple perspectives the subtle and interesting relationship between the theory of rational choice and Darwinian evolution. In rational choice theory, agents are assumed to make choices that maximize their utility; in evolution, natural selection 'chooses' between phenotypes according to the criterion of fitness maximization. So there is a parallel between utility in rational choice theory and fitness in Darwinian theory. This conceptual link between fitness and utility is mirrored by the interesting parallels between (...) formal models of evolution and rational choice. The essays in this volume, by leading philosophers, economists, biologists and psychologists, explore the connection between evolution and rational choice in a number of different contexts, including choice under uncertainty, strategic decision making and pro-social behaviour. They will be of interest to students and researchers in philosophy of science, evolutionary biology, economics and psychology. (shrink)