Rationality and its bounds: Re-framing social framing

The concept of bounded rationality has been at the forefront of a recent empiricist program in economics which under the heading of ‘behavioral economics ‘ seeks to broaden the rational choice paradigm in the direction of psychology, to the neglect of a similar broadening in the direction of sociology. While a small but increasing number of studies consider the influence of social framing on economic decision making, these studies proceed on an impoverished understanding of the social, treating social framing as inessential in a sense clarified in this chapter, which argues for an essential notion of social framing effects. Starting point is Pareto’s distinction between logical and non-logical action, and an exploration of how the concept of bounded rationality has been employed to broaden the logical action paradigm in economics towards its counterpart of non-logical action. The puzzle of successfully performed transactions in anonymous non-repetitive encounters serves as illustrative context and builds up to the overarching argument that in conceptual terms, social framing needs to be understood in the more general context of human intentionality, where rational behavior can be addressed as a particular kind of intentional response to environmental factors. The paper pursues this argument in the context of social framing by drawing from Pettit’s (1993) dual distinction between atomism ver-sus holism on the one hand, and individualism versus collectivism on the other hand, to introduce a the distinction between essential as opposed to inessential social framing effects. It concludes that departures from psychologistic notions of bounded rationality require a theory of essential social framing, in the sense that the social frames intentional behavior in a constitutive way.