Rationality
In humanities and social ( psychology , social psychology ) and economics , rationality characterizes conduct consistent, even optimal, relative to the goals of the individual.
However, this raises the question of the rationality of goals in relation to perceived interests of individuals.
In philosophy, the principle of rationality is called Logos.
Summary |
Economic Rationality
There is talk of economic rationality when the behavior of individuals corresponds to their interests: the agents are supposed to act in such a way that they maximize their well-being. This well-being is often calculated with a utility function that takes into account income and leisure time. The neoclassical theory is the concept of "rationality" a central assumption of general equilibrium model. The concept of economic rationality does not define, however, what is precisely the interest of an individual, it implicitly assumes the existence of a consensus on that concept.
Bounded rationality
As opposed to the concept of "instrumental rationality" (neo-classical assumption), H. Simon (Nobel Prize in Economics) developed the concept of bounded rationality or procedural. This is not to say that economic agents do not always behave rationally, but they do not have any information to make their decision (scarcity facing a need for information, or conversely, an abundance information which then requires a triage). They realize their choice after they stop making process once the satisfaction they will withdraw their appropriate use. This rationale is even more limited by the existence of uncertainty. Thus the decision maker is never assured that his choice will lead to consequences that he had previously envisaged, given the risk probability can not be based on its environment.
The behavioral finance in particular studies the cognitive biases and techniques for handling that can affect the economic rationality.
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