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Does optimization imply rationality?

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  • Mongin, Philippe

Abstract

The relations between rationality and optimization have been widely discussed in the wake of Herbert Simon's work, with the common conclusion that the rationality concept does not imply the optimization principle. The paper is partly concerned with adding evidence for this view, but its main, more challenging objective is to question the converse implication from optimization to rationality, which is accepted even by bounded rationality theorists. We discuss three topics in succession: (1) rationally defensible cyclical choices, (2) therevealed preference theory of optimization, and (3) the infinite regress of optimization. We conclude that (1) and (2) provide evidence only for the weak thesis that rationality does not imply optimization. But (3) is seen to deliver a significant argument for the strong thesis that optimization does not imply rationality.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37740.

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Date of creation: 1998
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Handle: RePEc:pra:mprapa:37740

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Keywords: Optimization; Rational Choice; Bounded Rationality; Transitivity; Revealed Preference; Infinite Regress;

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References

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  1. Frédéric Laville, 1998. "Modélisations de la rationalité limitée : de quels outils dispose-t-on ?," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 0(2), pages 335-365.
  2. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, Econometric Society, vol. 52(4), pages 1007-28, July.
  3. Lismont, L. & Mongin, P., . "On the logic of common belief and common knowledge," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1104, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Plott, Charles R, 1973. "Path Independence, Rationality, and Social Choice," Econometrica, Econometric Society, Econometric Society, vol. 41(6), pages 1075-91, November.
  5. Conlisk, John, 1988. "Optimization cost," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 9(3), pages 213-228, April.
  6. Philippe Mongin, 1984. "Modèle rationnel ou modèle économique de la rationalité ?," Revue Économique, Programme National Persée, Programme National Persée, vol. 35(1), pages 9-64.
  7. Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(115), pages 307-17, July.
  8. Fishburn, Peter C, 1991. " Nontransitive Preferences in Decision Theory," Journal of Risk and Uncertainty, Springer, Springer, vol. 4(2), pages 113-34, April.
  9. Frédéric Laville, 1998. "Modélisations de la rationalité limitée : de quels outils dispose-t-on ?," Revue Économique, Programme National Persée, Programme National Persée, vol. 49(2), pages 335-365.
  10. Lipman, Barton L, 1991. "How to Decide How to Decide How to. . . : Modeling Limited Rationality," Econometrica, Econometric Society, Econometric Society, vol. 59(4), pages 1105-25, July.
  11. Sen, Amartya K, 1973. "Behaviour and the Concept of Preference," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 40(159), pages 241-59, August.
  12. Campbell, Donald E, 1978. "Realization of Choice Functions," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 171-80, January.
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Cited by:
  1. Philippe Mongin, 2005. "L'apriori et l'a posteriori en économie," Working Papers, HAL hal-00243013, HAL.
  2. Marc Fleurbaey & Philippe Mongin, 2004. "The News of the Death of Welfare Economics is Greatly Exaggerated," Working Papers, HAL hal-00242931, HAL.
  3. Paola Manzini & Marco Mariotti, 2003. "How vague can one be? Rational preferences without completeness or transitivity," Game Theory and Information, EconWPA 0312006, EconWPA, revised 16 Jul 2004.

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