Economic Rationality

Economic rationality refers to the conception or conceptions of rationality commonly utilized in economic theory. While there is no single notion of rationality that appeals to all economists, there is a core conception of rationality that forms the basis of much economic theorizing. This view of rationality, termed the neoclassical conception of economic rationality, takes rationality to consist largely in the maximization of subjective utility. While it has sometimes been assumed that subjective utility is equivalent to self-interest, these notions are not necessarily identical, as the latterallows that an agent might have preferences or desires that are not purely self-interested. The neoclassical conception of economic rationality can be taken as a descriptive account used to explain human behavior, a normative account of how rational agents ...